OTC MARKET IS OFF TO A STANDING START Playing peek-a-boo with trade reporting

An "over-the-counter" trade of 100,000 shares of SIF "Oltenia" was reported yesterday on the website of the Bucharest Stock Exchange, but a few minutes later, the report was deleted as if the trade had never happened. People wanting to check whether the OTC trade had really happened could find no relevant information for several tens of minutes, on the website of the Bucharest Stock Exchange, nor on that of the Central Depository, which is precisely the institution which should have settled the transfer of the shares.

The "mystery" was later solved by Alin Barbu, the deputy managing director of the BSE, who said that the BSE decided to remove the announcement of the OTC trade from the website, after finding out that the Central Depository does offer settlement for OTC trades involving Romanian stocks.

The possibility of allowing OTC trading for shares already listed on the BSE has "inflamed" the entire domestic market, after the management of the Central Depository announced, at the end of its term, that the Depository would begin offering settlement of this kind of trades, after refusing to do so for almost a year.

The Bucharest Stock Exchange, afraid it would lose the bulk of its commissions, has been struggling to stop the launch of the OTC market, going as far as to request that the members of the Board of Directors of the Depository answer for their decision, market sources say.

The fact that yesterday"s OTC trade took place one day before the General Meeting of the Central Depository is most likely not an accident. The agenda of tomorrow"s General Meeting of the Central Depository also includes the request of the BSE to suspend the launch of the OTC market, until the former Board of Directors of the Depository approves a study on the impact OTC trades would have on the Romanian capital market.

Since the Bucharest Stock Exchange controls 66% of the Central Depository, it"s quite likely that OTC trading will be shelved again.

Alin Barbu, the deputy managing director of the BSE, said: "The European Commission has issued Regulation 1287/2006 dealing with the implementation of the MiFID directive. According to it, the market operator must publish within a certain delay a transaction made outside the regulated market, for which publication was requested by one of the participants, for a financial instrument for which the BSE - in this particular case -, is a relevant market. In this concrete case, the BSE received this request and approved the trade. Since the trade involved Romanian stocks, the BSE checked with the Central Depository whether the latter provided settlement services for OTC trades and it didn"t. Since the BSE is consistent with its principles of providing accurate market information, it has decided to take back the announcement of a trade which could not be performed".

< link >https://www.bursa.ro/the-otc-market-under-attack-99118&s=english_section&articol=99118.html< link2 >The OTC market under attack< link3 >