English• Victor Eros: CNVM: "A person cannot use several offices to accumulate power."
• Rares Nilas: "This is the first time I hear of a possible conflict of interests in the BSE Group."
The National Securities Commission (CNVM) has started a public debate, until 7 October, on a draft regulation stipulating that members of the board of directors of a market operator cannot concurrently be members of the board of directors or executives of a central depository, a clearing firm or of the Investors Compensation Fund.
Moreover, the draft regulation stipulates that the members of the board of directors of a central depository cannot be directors of a company whose securities are accepted for trading.
Among those who will have to choose only one office of director in an entity operating on the capital market are Stere Farmache, Rares Nilas, Ovidiu Sergiu Pop, Adrian Manaila, Dana Mirela Ionescu, Lucian Isac and Teodor Ancuta.
The draft regulation prohibiting the plurality of offices of directors in entities operating on the capital market, currently subject to public debate, was not designed as a way of getting even, representatives of the National Securities Commission (CNVM) assured.
The relationship between Romanian securities exchanges and the CNVM have been rather tense for several months, since the Commission showed reluctance to approve several projects of the Bucharest Stock Exchange (BSE) and to turn a favourable ear to multiple requests by the Sibiu Monetary - Financial & Commodities Exchange.
The Commission"s regulation contradicts BSE"s plans to strengthen control over the entities in the BSE Group, as stated during the General Meeting of Shareholders. "The purpose of this initiative is quite clear. It follows the guideline of the European Union on strengthening control and supervision over financial markets," CNVM Commissioner Victor Eros told BURSA. "The Commission has only now created this draft regulation, because the problem subject to regulation has only now become actual in the European Union and everywhere else in the world," Eros added.
He believes that one person cannot use several offices held within the same group to accumulate power. "No one assumed that certain persons had breached the law or abused of their office. The conclusion has emerged that the current economic crisis actually started from a financial crisis caused by financial speculations and therefore authorities everywhere are trying to strengthen control over these markets," Eros explained.
• Dan Paul: We are reviewing the draft with our lawyers and will propose amendments
The National Securities Commission is also planning to end a long-lasting practice of the Bucharest Stock Exchange (BSE) to appoint the president of the Brokers" Association as a Member of the BSE Board of Directors by default. "The entities operating on the capital market have an obligation to remove from their articles of incorporation and various bylaws the provisions stipulating the allocation by default of a seat on the Board of Directors to a certain shareholder or entity," the draft CNVM regulation stipulates.
Dan Paul, President of the Brokers" Association, told BURSA that the executive management of the Bucharest Stock Exchange were reviewing the CNVM draft regulation with BSE lawyers and were planning to propose several amendments. "I am the only one directly affected by this planned regulation," Paul said. In his opinion, the draft will not be adopted in the current version.
Rares Nilas, a Director of the Bucharest Stock Exchange and a Director of the Central Depository, told BURSA that he did not understand the reason for such draft regulation or the added value that it might generate for the Bucharest Stock Exchange and the Central Depository. He specifically rejected all the arguments presented by CNVM Commissioner Victor Eros.
"No one is accumulating any power. The power belongs to the shareholders and they exercise it upon appointing their representatives on the Boards of Directors. Additionally, the management of the BSE Group needs to be centralized because, for instance, the Central Depository is a subsidiary of the Bucharest Stock Exchange," Nilas explained. He further stressed that it was for the first time that he had heard of a possible conflict of interests inside the BSE Group.
The National Securities Commission also expects the relevant entities to comply with the provisions of the draft regulation as of the next general meeting of shareholders of each entity. The same provisions apply to the spouses and second-degree relatives of the directors of entities operating on the capital market, system operators, central depositories, clearing offices and the Investors Compensation Fund.
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