Conflict of interest inside the Bucharest Stock Exchange Group

The Bucharest Stock Exchange is the largest shareholder of the Central Depository, holding around 66%. The Central Depository handles the settlement and clearing of trades on the stock market. Last week, the managers of the Depository greenlit transactions on the OTC market, by approving their settlement by the Depository, after the project has been put on hold for months.

Mircea Botta, the vice-president of the BSE, said that it is up to the shareholders of the BSE and to market participants to decide whether the OTC market is opportune.

"I do not think that it is the job of the courts to decide whether or not the a market should exist or not. The existence of the OTC market must be the result of a consultation between the shareholders of the Stock Exchange and the participants in the market, according to European Directives. Let"s not forget that the current chairman of the Board of the Exchange one year ago voted in favor of creating an OTC market".

Sources from the Board of Directors of the BSE, who wanted to remain anonymous, reluctantly claim that the current management of the BSE has not yet reached a final decision on the a definitive decision concerning the sanctioning of the Board of Directors of the Central Depository.

"It has not been discussed yet. You have to understand that in any company, any shareholder can request the sanctioning of the company. The shareholder can request the sanctioning of a member of the Board if it produces conclusive proof that the latter acted against the interest of the company", the aforementioned sources explained.

The Board of the Exchange intends to sanction the members of the Board of Directors of the Central Depository, claiming that facilitating operations on the OTC market would harm the official market of the BSE.

In fact, this situation is a case of conflict of interest: as the BSE is the majority shareholder of the Central Depository, it pursues its own interests, as it sees the OTC market as a competitor; on the other hand, the management of the Depository needs to after the latter"s interests, which makes their decision to support the OTC market a fair one.