DAX, gold and oil contracts on the BSE

Investors on the Bucharest Stock Exchange will be able to trade structured products based on the DAX index of the Frankfurt Stock Exchange, oil and gold. The certificates are issued by "Erste Bank", and will be traded both in Vienna and Bucharest.

"So far, investors on the BSE only had access to stocks and bonds, but the launch of these new instruments will provide them with access to commodities or the DAX index, the most active European index", said for BURSA, Valerian Ionescu, the head of the Financial Markets department of BCR, when explaining why investors in Bucharest would find the certificates of "Erste" attractive.

Domestic investors can currently trade derivatives based on gold, on the Sibiu Exchange, but their liquidity is thin. The official of BCR however expects the situation to be different in the case of the BSE, since BCR has committed to permanently provide bid and ask quotes for the new instruments.

"The great difference compared to the Sibiu Exchange is the fact that BCR will be acting as a market maker of sorts. Anybody who wants to buy or sell will have a counterparty", Valerian Ionescu added. He said he expects turnover of the new products to take a few months to increase, after investors learn how the new products work.

To begin, "Erste" will launch this Thursday nine individual certificate issues, of which three of the index type and three of the turbo type. Of the latter, three will allow short positions and three will allow long positions.

"The index certificates track the price of a basket of stocks (indexes, such as the German Dax, Dow Jones, S&P500, etc),whereas the turbo certificates are leveraged, which amplifies the results of the quote changes. These would be more beneficial for investors with limited capital ", explained Adrian Prîsnel, head of Global Markets at brokerage firm "Prime Transaction".

The quotes of the certificates will be displayed on the first trading day, as they depend on the price of the underlying asset. The trading block is one unit. The variation limit is ±15% for the index certificates and ±35% for the turbo certificates.

The officials of the Bucharest Stock Exchange yesterday announced that trading of structured products will take place in a similar manner to that of "Erste" shares, i.e. using nominee accounts and no prevalidation mechanism.