ANOTHER SCANDAL ON THE CAPITAL MARKET  The AIPC is asking for the resignation of the Board of the Stock Exchange

• The reason: the initiative to transform the Rasdaq into the ATS

• The explanations of BSE president Lucian Anghel did not provide satisfaction to the investors

• The CNVM will have to manage the conflict

The Association of Stock Market Investors (AIPC) has asked for the resignation of the Bucharest Stock Exchange, moving the conflict on the status of the Rasdaq market to a different level.

After the exchange of lines between the two companies which took place over the last two weeks, the harshness of the criticism has escalated in yesterday's statement by the AIPC, as it called the initiative of the BSE to change the Rasdaq into an alternative trading system "occult and illegal".

Laviniu Beze, the president of the AIPC, says that "the Association is asking for the resignation of all the members of the Board of the BSE for its occult and illegal initiative to turn the Rasdaq market into the BSE's alternative trading system".

The AIPC is warning that "the occult and illegal initiative of the BSE to turn the Rasdaq market into an alternative trading system heavily undermines the confidence of investors in the Romanian stock market by ignoring the principle of the high transparency of the stock market and by blatantly violating the existing regulations".

Last week, Lucian Anghel, the president of the BSE, had said that it was precisely because of the need to bolster the investors' confidence that the Rasdaq needed to be restructured.

The Bucharest Stock Exchange considers that the problem of the clarification of the status of the Rasdaq is affecting the image of the stock market, and its resolution can no longer be postponed, according to the statements of the president of the BSE, Lucian Anghel. He insisted about reassuring the investors that the BSE does not intend to change the requirements for listed companies.

"The opponents" seem to be speaking extremely different languages, even though before the week-end, they had left room for a compromise. According to some market sources, last week, the two companies had agreed to meet this week to discuss the "issue". It remains to be seen what effects the ultimatum of the AIPC will have.

• The AIPC accuses the BSE of conflict of interest

The AIPC estimates that the initiative of the BSE to take over the issuers listed on the Rasdaq market into its own trading system, by requiring its own contracts, tariffs and commissions, is clearly a conflict of interest, through actions which violate, among other things, competition regulations themselves: "It also goes against the norms applicable to the stock market for people from within the BSE to take actions in an non-transparent manner which result in the change of the status of the Rasdaq market rather than provide this information to all the investors who hold shares in the companies listed on those markets.

We want to emphasize that the issuers currently listed on the Rasdaq market can not be forced, through an illegal act of administration, to be included in a trading system for which they did not freely opt, just like they can't be forced to accept rules, contracts, tariffs and commissions without any prior negotiation. According to the provisions of the Law no. 297/2004, the BSE can not change the status of an existing market, it can only set up an alternative system which various issuers can adhere to freely, after knowing the operating rules of the system in question".

• Investors are asking the CNVM "not to become complicit to the action of the BSE"

The Romanian National Securities Commission is being publicly asked by the AIPC to mediate the conflict, but it remains to be seen what its position will be.

Through the voice of chairwoman Carmen Negoiţă, in the month of November, the Commission has expressed the opinion that the "issue" of the Rasdaq must be urgently dealt with.

Also then, the CNVM put up for debate a project to change the status of the Rasdaq, but so far has passed no regulation towards that purpose.

Meanwhile, the Government has decided to disband the CNVM and to create a new authority, which will oversee together, the stock, insurance and pensions markets. The new regulator is scheduled to begin activity in March, meaning that the CNVM may have a completely different set of concerns than the Rasdaq market, especially since tipping the balance towards either side could draw criticism its way.

The AIPC states: "We are publicly asking the Romanian National Securities Commission ("CNVM") not to become complicit to the action of the BSE to take over the issuers listed on the Rasdaq market by declaring the Rasdaq market as the BSE's own trading system managed by the BSE itself.

Compared to the recent actions to change the status of the Rasdaq non-transparently and by force, the AIPC warns that the Romanian stock market also includes the Rasdaq market and that this belongs to all the investors and not just to some interest groups".

The AIPC is warning that in this particular case it will notify the authorities to sanction the attempts to destabilize the Rasdaq market, as well as all of the European institutions which have the role of protecting investors and consolidating the adequate functioning of the financial markets.

The AIPC accused the BSE of acting in a non-transparent manner because the Bucharest Stock Exchange did not honor the investors' request to inform them about the Rasdaq market.

The BSE had responded in a rather equivocal press release that fitting the Rasdaq into one of the market types stipulated by the domestic legislation represents a priority for the BSE and for the CNVM alike.

According to the general manager of the BSE, Victor Cionga, Romania could receive a warning from the European Commission if the status of the Rasdaq isn't clarified, meaning choosing between having it declared a regulated market according to the European directives or an alternative trading system.

The status of the Rasdaq market raised numerous controversies over time, because the CNVM treated the Rasdaq like a regulated market, even though according to the European regulations, it is not.