Grigore Chiş, SSIF "Broker": "The stock market is inefficient and dominated by incompetent and starry-eyed brokers"

We have an inefficient stock market, which has rules without any practical purpose, a market dominated by incompetent and starry-eyed brokers, considers Grigore Chiş, the general manager of SSIF Broker.

"If we don't bring the liquidity makers on the Bucharest Stock Exchange and the Sibiu Exchange, the latter two are sentenced to bankruptcy, or to what is happening to the Kishinev Exchange, where there is the pre-opening and the pre-closing state, and there is no trading state", he said.

In order to create liquidity, the Bucharest and Sibiu Exchange need to offer better terms than the other exchanges in the region, because they operate far riskier markets, said Grigore Chiş.

He said that at the present time, the only instruments on the BSE which have constant liquidity are the structured products based on foreign indexes, and that is because there are foreign specialist market-makers, which provide liquidity to the remaining market participants.

The head of SSIF Broker said that the most important discussion which needs to happen now, on an institutional and public level, concerns the specialist market-makers.

"Only after discussing the conditions which the Bucharest Stock Exchange and the Sibiu Stock Exchange are willing to grant to specialist market-makers in order to generate liquidity, we can talk about the rest of the commissions charged to normal brokerages", he added.

Grigore Chiş said that SSIF Broker is a direct-access member of the Vienna Stock Exchange, where it has the conditions needed to become a specialist market-maker and that, over there, the intermediaries receive a certain amount of money, each month, from the stock exchange to be a marker-maker, and a commission discount.

• The minimal trading cap needs to be set according to business rules

A minimal limit of trades needs to be set by the business rules, but in Romania, it has come to the point where brokers are trading with 0.15% commission, just to win positions in the chart of the brokerage firms, said Grigore Chiş.

He said: "For anybody who is currently looking at the current market situation, it is clear that there is no room for 64 brokerages in the current landscape".

Grigore Chiş said that if the Bucharest Stock Exchange and the Central Depository continue to remain as impassive as they are now, dominated by regulations created overnight by their specialists, which they impose upon the brokerage firms without allowing them to intervene, they will go bankrupt.

The BSE, the Sibiu Exchange and the Romanian National Securities Commission, need to understand that according to the legislation in effect, the brokerage firms need to be helped conduct trades for their investors on the territory of Romania, the head of SSIF Broker said.

Grigore Chiş also said that he has a message he wants to send to the two Romanian stock exchange operators: "I hereby want to inform the Bucharest and the Sibiu Exchange that we are no longer 100% dependent on their whims. If they don't realize shortly that they no longer have a monopoly position when it comes to financial intermediation in Romania, they will go bankrupt".

He went on to say: "If they want us to keep working with them, to generate commissions so their employees can get paid, and their shareholders can continue to earn dividends, we invite them to come negotiate with us, so we can have a serious talk about the future of the Romanian stock market".

Also, Grigore Chiş said that the brokers can trade on the Vienna, Warsaw or any other exchanges without being dependent on the two institutions.

• "Pension funds are looking to withdraw from the country, because of the lack of liquidity in the market"

Pension funds want to withdraw from Romania, because of the lack of liquidity, international brokers are leaving, and the domestic ones are already getting more business from the foreign markets than they do from the local market, Grigore Chiş said.

Due to the requirements imposed by this institution, the Romanian stock market has entered a stage of accelerated meltdown, he said.

"The people of the Central Depository of Bucharest seem like beings from another planet, living in their ivory tower, and they can't see that everything is collapsing noisily around them. Its majority shareholder, the BSE, isn't taking any action to change things", Grigore Chiş said.

In his opinion, it is not the Government, or the CNVM that are to blame for the current state of things. "It's our fault, as a profession, because we are not active, and of the two exchanges, which still think they have a monopoly", the head of SSIF Broker said.

Grigore Chiş emphasized the fact that investors, international brokerage firms, foreign and domestic funds are leaving, and the employees of the two exchanges, of the two depositories and the small domestic brokers continue to play "a nonsensical play without an audience".

The harsh statements made by Grigore Chiş come as, on November 21st, the Bucharest Stock Exchange sent a questionnaire to brokerage firms concerning its policy to "align to the international practices and standards, including when it comes to its commissions and fees policy". Through the document in question, brokers were being asked to agree to the new commission policy.

The Association of Brokers criticized this new policy, thus emphasizing that the introduction of a minimum amount which the market participants would have to pay regardless of their monthly turnover places smaller brokers at a disadvantage.

The BSE specified that the questions in the questionnaire are addressed to all market participants, without discrimination.

According to the press release sent by the BSE, the final decision on the application of the commission and fee policy rests with the General Meeting of the Shareholders of the Bucharest Stock Exchange, which also includes the members of the Association of Brokers.