Alexandru Elian, "Delta Valori Mobiliare": The forex market is not regulated, Sibex is

Reporter: "Delta Valori Mobiliare" is a market-maker for the EUR/RON and oil contracts on the Sibiu exchange. We have seen a recovery in the volume of these contracts over the last trading sessions ... Is this temporary, tied to the evolution of oil on the international markets or are there other factors that influenced it?

Alexandru Elian: The bid-ask spreads are now lower, almost half of what they were before, and thus, they are now far more attractive. Oil is one of the financial instruments that fluctuate very heavily and if one interprets the direction of the move correctly, one can make substantial gains.

Reporter: We don"t see too many intermediaries beating a path to become market-makers ... What are the reasons behind this "reluctance"?

Alexandru Elian: It is a very specialized activity that one needs to take on, and which requires both equipment and financial resources.

I would expect one to need about one million Euros ... We are currently doing arbitrage on two markets, we will expand the activity of market maker to other instruments as well, as they get listed on the Sibiu Exchange, we will probably become market-makers for several instruments.

Reporter: Which instruments are currently missing from the Sibiu Exchange?

Alexandru Elian: As a first example, there are many currency pairs that aren"t listed on the Sibiu Exchange, such as USD/CHF, USD/JPY, EUR/CHF, etc.

Reporter: Why would domestic investors be interested in trading these pairs in Sibiu, when they could trade them on the Forex market, where they are being promised double-digit returns?

Alexandru Elian: Sibex provides investors with regulated term-contracts, with conditions similar to those of forex investments, but since the Sibiu Exchange is a regulated market, we also provide them with the guarantee that if they do win, they will get their money.

Reporter: Doesn"t the forex market guarantee that? Were there any cases where investors didn"t get their money?

Alexandru Elian: This guarantee doesn"t exist in the case of Forex platforms. It has happened, it is happening and it will happen again. Unregulated Forex platforms frequently play against investors. When the brokerages that own the platforms are not sufficiently capitalized, they can go bankrupt. I am not referring to forex platforms that have behind them banks or major financial companies, but rather those platforms that are owned by private companies that have insufficient resources. In Romania, the CNVM has very clearly said that the forex market is unregulated and that investors enter the market at their own risk.

The essential aspect is that we want to allow Romanian investors that enter the Forex market with the possibility of making similar investments, in similar conditions, but on a regulated market, where they are protected against the things that can happen on the unregulated market.

Reporter: How do you explain the fact that, in spite of the benefits that Sibex has over the forex platforms, the liquidity of the contracts in Sibiu (euro/ron, Dow Jones, gold, oil) isn"t that high?

Alexandru Elian: Sibex and the brokerage firms that are active on it have not been successful in getting investors to understand clearly the differences and the benefits that Sibex has over the forex platforms.

Reporter: Does Sibex have a written strategy on how to do that, like a document that was approved by its management?

Alexandru Elian: As you well know, lately Sibex has been waiting for a clarification of its medium-term status. The strategy exists. We currently have a new Board of Directors, which, aside from two notable exceptions, is identical to the Board of Directors that was elected in the General Shareholder meeting of April, which was later suspended by the court.

The decisions made by the management of Sibex must focus on very concrete objectives: the market needs to become more liquid, waste and spending needs to be trimmed, and turnover needs to increase, just like in any commercial enterprise. We are not looking to reinvent the wheel, but to provide investors with the same conditions that they get on the foreign platforms, in Romania, on a regulated market. It"s not rocket science.

Reporter: If it"s not rocket science, why wasn"t it done until now?

Alexandru Elian: Ask the old management!

Reporter: Concretely, what are the steps that should be followed?

Alexandru Elian: The instruments need to be defined and approved... We need to convince as many market makers to actively operate on them, we need marketing that is as good as possible. This would allow us to make people that play on the foreign markets and that need these instruments for non-speculative purposes, such as protecting themselves in the case of import-export operations, aware of the fact that there is a regulated market for these contracts and that they are liquid.

Reporter: Does the Sibiu Exchange feel like it is engaged in a competition with the Bucharest Stock Exchange on the derivatives segment?

Alexandru Elian: "Delta Valori Mobiliare" is an active member of Sibex and of the BSE and I would be happy if both exchanges were active on the derivatives segment. It is not a war, if that was what you meant...

Reporter: What is the situation of the leadership of the Sibiu Exchange at the moment?

Alexandru Elian: I am not a member of the management.

Repoter: But you are a shareholder...

Alexandru Elian: We are waiting for the General Shareholder Meeting of July 15 to see what will happen then.

Reporter: Who proposed the revocation of Teodor Ancuţa from the current board of directors? The proposal came as an addendum to the agenda of the General Shareholder Meeting.

Alexandru Elian: It didn"t come from "Delta", but I think replacing him with Mr. Cristian Sima would fulfill the wishes of the current shareholders. We will see what happens at the General Shareholder Meeting. I was pretty upset at some of the statements that Ancuţa made for BURSA, as some of my clients, who are also shareholders of Sibex, went through a lot of uncertainty.

In my opinion, he has actually incriminated himself. He has mentioned irregularities with the General Shareholder Meeting, even though he was the one who chaired it, and he had no reservations in signing the minutes.

The lawsuit in itself is a legal matter that will be solved in court, but the problem lies with the statements that he made in the press, which in my opinion are manipulative.

We currently have a board of Directors that is doing its job, as I think that Mr. Simionescu (ed. note: Dan Simionescu, the current president of Sibex) has taken on a far greater investment of time than he would have initially wanted, I also wish Cristian Sima were back on the Board, aside from that I don"t think there"s anything to clarify at Sibex. What I mean is that the overwhelming majority of shareholders, has expressed that point of view in the last General Shareholder Meeting and I think he will do it whenever it will be necessary. The Exchange is well managed, it"s working, and we will have results.

Reporter: I haven"t seen any decision of the acting Board of Directors concerning the development of Sibex...

Alexandru Elian: Directors are probably a little busy, right now, with legal issues of the company... What I see is that trading volumes has increased substantially, meaning that, from my point of view, the directors are doing their job...

Reporter: But has the number of investors increased?

Alexandru Elian: You"d have to ask every brokerage firm about that. We did see an increase in the number of clients, but not by much.