In defense of the Bucharest Stock Exchange

The image of the Bucharest Stock Exchange is being unfairly trampled nowadays, by the very same press that a few days ago would gush over the record size of the "Petrom" Secondary Public Offering, which, according to the ecstatic comments made about it, "would put the Bucharest Stock Exchange on the map of foreign institutional investors".

After the failure of the Offering, these publications, even those claiming to be specializing in finance, completely changed their tune; they"re now claiming that the Bucharest Stock Exchange is "dead".

And why would that be?!

Get this: because it allows the majority shareholders of companies to mistreat minority shareholders.

And perhaps, because the CNVM isn"t lifting a finger to do anything about that mistreatment.

However, I was unable to understand what my colleagues are accusing the BSE of, in this particular matter.

Because it doesn"t have any.

The majority shareholders are always tempted to mistreat the minority shareholders anywhere in the world, which is why an entire body of regulations has been developed, along with a body of management principles that the managers of the company (as well as its shareholders) need to accept, to an extent, depending on market tradition.

We have both.

There is, indeed a weakness when it comes to the oversight of the Romanian National Securities Commission, but it is wrong to say that they are not doing anything at all is false; (I could provide examples that they are not sitting on their hands).

Court rulings on issues pertaining to the capital market are another weak spot, but it"s not they are not doing anything either.

Anyway, these vulnerabilities have nothing to do with the Secondary Public Offering of "Petrom", and our journalists didn"t find out about them only after the failure of the Offering.

If they wrote what they did out of conviction, then, during the Offering, they should have claimed that the offering of "Petrom" puts a "corpse" on the map of institutional investors.

But they are probably not writing that out of conviction, but just because the subject is handy.

On the other hand, nobody wrote one word about the irregularity of the Secondary Public Offering of "Petrom", an important topic, which was only discussed in BURSA.

Could it be because BURSA "monopolized" this subject?

Could it be a matter of pride?!

Or was it a question of the fact that they were not competent enough to write about it? (even though we did deliver everything to them on the subject on a silver platter).

Indeed, one of the weaknesses of our capital market would be the lack of competence among its journalists (even in the case of those who claim to be "specialized") and its lack of morality.

For instance, a significant part of the public (including journalists) was left with the impression that the Bucharest Stock Exchange, being a market for securities, would have its share of blame of the failure of the Secondary Public Offering of "Petrom".

Which is a mistake.

As a market, the Bucharest Stock Exchange is blameless.

As a market, the Bucharest Stock Exchange has nothing to do with the Offering of "Petrom".

The BSE played no part in that offering.

The offering of "Petrom" did not take place through the Bucharest Stock Exchange.

Which is precisely the objection raised by the BURSA newspaper, during the Offering: that it should have taken place through the BSE and that it didn"t.

That is a clear fact.

As a market, the Bucharest Stock Exchange can not be blamed for the failure of a secondary public offering which did not go through it.

In fact, if the Secondary Offering of Petrom had gone through the Bucharest Stock Exchange, its chances of success would have improved.

It is precisely the other way around.

This is precisely the fair accusation against the Bucharest Stock Exchange, but not as a market (after all as a market it is functional), but as an institution: as an institution, the Bucharest Stock Exchange tolerated the violation of the capital market legislation, and even worse, the violation of the Exchange"s own Code, thus accepting to vouch for the Secondary Offering of "Petrom", when it actually had nothing to do with it.

Regardless of the risks and rewards, the representatives of the Bucharest Stock Exchange had no right to mislead the public and make people believe that the Offering would take place through the Stock Exchange.

The management of the Bucharest Stock Exchange made a fatal mistake.

It"s left without the money it could have made, and with its image tarnished as well.

For the wrong reason.

Unfairly.

But, deservedly.