Bucharest Stock Exchange Raises Price Variation Limit To 40%

• Sibiu Exchange cries unfair competition

Ş.C.

The Bucharest Stock Exchange (BSE) Board of Directors in mid-May decided to increase the price variation limit from 15% to 40% as of 15 June, according to a press release issued late last week. The measure applies to the stock included in the calculation of the BET Index, which reflects the ten most liquid stocks on BSE. The extension will be performed in three steps, from 15% to 25%, then to 35% and ultimately to 40% as a number of conditions are met. The variation can be positive or negative.

The decision of the BSE Board upset the Sibiu Exchange, whose management asked the National Securities Commission (CNVM) to reject the extension of the price variation limit. "We have notified the National Securities Commission and asked them not to endorse this decision," Sibex President Teodor Ancuta told BURSA.

He claims that the main risk of adopting the new variation limit is to allow market manipulation. "The Bucharest Exchange has a daily liquidity of approximately 5 million euro, so it is very easy for someone to manipulate the market. It is true that other bourses have also adopted this variation limit, but their liquidity is perhaps ten or fifty times higher than the liquidity of the BSE," Ancuta added. He believes that this measure will reflect poorly on the operations of the Sibiu Exchange, determining investors not to trade its products. In his opinion, BSE is engaging in an act of unfair competition against Sibex. This was also one of the arguments stated in the request made to CNVM to reject BSE"s decision.

BSE reserves the right not to apply the automatic procedure for extending the price variation limit or to intervene on the operational flow of the procedure, the press release indicates.