BVB will participate with a maximum of three million euros in the capital increase of CCP.RO Bucharest

The Bucharest Stock Exchange (BVB) will participate with up to three million euros in the capital increase of CCP.RO Bucharest, the entity intended to function as a central counterparty in our country, according to yesterday's vote of the BVB shareholders, who also approved the Plan of Business updated by the CCP. It is only the first stage for the Central Counterparty project to overcome the impasse it entered in the spring, when Euronext Clearing decided to change the way of collaboration with CCP.RO Bucharest. Today, CCP shareholders vote to increase the entity's share capital by five million euros, of which three million is the BVB contribution.

According to the updated Business Plan, the capital paid by CCP.RO shareholders to date is 19.7 million euros, and taking into account an additional contribution of five million to be made by the end of 2024, the entity will meet the capital requirements by EMIR, taking into account the accumulated losses recorded in the first years of operation. Estimates are that in July of next year, the first futures contracts with asset-backed shares, share indices, electricity with cash settlement, as well as forward contracts for the electricity market will be launched. The share loans would be available only in June 2027.

According to the latest financial projections, the CCP would become profitable in 2027, with a net result of four million euros in 2030, according to the Plan approved yesterday by the shareholders.

• Adrian Tănase: "The technology is the same, but the premises on which it runs are different; we will also operate under the Euronext license"

The reasons for Euronext Clearing's withdrawal from the contract with CCP.RO and the delay in the completion of the project, which according to initial estimates was supposed to be operational in 2020, were the main topics of discussion between the BVB shareholders present in the room yesterday and the management members of our capital market operator.

"I cannot disclose the contractual clauses between CCP.RO Bucharest and Euronext Clearing. What I can tell you is that Euronext had the contractual framework that allowed it to make the change", said Adrian Tănase, General Director of BVB and President of CCP.RO. "The technology is the same, but the premises on which it runs are different. Before it was a «hosted solution» provided by Euronext; now the technology will run on the equipment of the Central Counterparty, and the entity that will provide the technological maintenance and development services will be another. But we will still operate under the Euronext license".

Asked about the reasons for the project's delay, BVB President Radu Hanga said: "We met to look for a way to move forward with the Central Counterparty project. Over the last five years we've had a lot of discussions at the exchange board level about the approach we should take to the project, the corrective measures we need to take, because the project is behind schedule. I don't think we are in the phase where we are looking for those responsible, but in the phase where we have to find the methods by which we can move forward with the project of building the Central Counterparty in Romania".

• Radu Hanga: "At the time of receiving the notification, I was not sure that things would go in the direction of terminating the contract and changing the way of implementing the technological solution"

Another question addressed to BVB management was related to the reasons why the board did not inform the shareholders, at the April balance sheet meeting, about Euronext Clearing's intention to terminate the contract with CCP.RO.

"The address received from Euronext regarding the intention to withdraw from the contract with CCP.RO triggered a series of negotiations between the Central Counterparty and Euronext. It was a buffer period during which we expected that the intention to exit the contract would not be final. At the time of receiving the notification, I did not have the certainty that things would go in the direction of the termination and the change of the way of implementing the technological solution. The trigger was the notification received from the Financial Supervisory Authority regarding the suspension of the authorization file. The fact that the authority sent us that the analysis of the file is suspended represented an alarm signal for the Stock Exchange Council regarding the timing of the implementation of the Central Counterparty and the moment when the timing risks being derailed", said Radu Hanga.

According to the BVB President, if in April the stock exchange announced the risk of a depreciation of its investment in CCP, as things look like now, such a measure would no longer be necessary.

Radu Hanga also stated that he does not believe that the termination of the contract between CCP.RO and Euronext Bucharest is due to CCP's fault. "I think it's about a normal clause existing in a contract between two parties, which agrees that if certain things don't happen by a certain date, the contract can be terminated," said Hanga.

The BVB official also stated that, from discussions with other shareholders of CCP.RO, it emerged that there is support for increasing the capital of the entity intended to function as a Central Counterparty in our country. "From the informal messages we have, we understood that there is interest on the part of some of the shareholders even to increase their holding share in the Central Counterparty", answered Radu Hanga to a question addressed by Ziarul Bursa.

• Adrian Tănase: "We have another project setup, with our own infrastructure and another service provider, so we have to repeat a series of system tests"

The Bucharest Stock Exchange owns 52.4% of CCP.RO, which means that the remaining two million euros needed for the operationalization of the central counterparty must come from the other shareholders of CCP, namely OPCOM, PPC Energy (formerly Enel), Electrica, Banca Transilvania, former SIFs and brokerage houses, which meet today or tomorrow to approve the company's capital increase.

The management of CCP.RO must have the complete file for authorization by December 8, but Adrian Tănase says that the file can be completed earlier.

"There are two things that we have to bring to the file. One is the new Business Plan with the approval of the shareholders. The shareholders of CCP.RO are convened, on September 4/5, to approve the Business Plan, the capital increase of CCP, the eight-year license contract with Euronext and the contract with the new provider of support services and further development of the solution technological. I hope that the shareholders approve all these points, so that we can provide the Financial Supervisory Authority with proof that the shareholders agree with the new direction of the project. The second part is related to technical tests. Now we have another project setup, with our own infrastructure and another service provider, so we have to repeat a series of system tests", said Adrian Tănase recently, in an interview given to the Bursa Newspaper.

The central counterparty is an entity necessary for the launch of derivative financial products in our country and share lending operations. Practically, the CCP intervenes between the market participants, becoming a counterparty for each of them. This guarantees both the buyer and the seller the completion of the settlement of the transaction.