Rumors boost SIF shares again

• Ovidiu Marian: The deputies will vote on the project on November 22nd

• The volatility has not yet attracted the attention of the CNVM

The holding limit in the SIFs may be raised from 1% to 5% next week, in a parliamentary session, after the draft law was validated by the Budget and Finance Commission of the Chamber of Deputies, last week.

The news, which was announced by Ovidiu Marian, the senator which made the legislative proposal caused a commotion in the markets yesterday. The shares of the five financial investment companies rose almost 10% around noon. The BET-FI index closed up with a gain of 6.06%, to 19,961.48 points, whereas the BET and BET-C indexes posted minor losses.

"On November 22nd, the project concerning the holding limit in the SIFs will be discussed in the Chamber of Deputies", senator Ovidiu Marian said.

Even though the information was revealed during the trading session, and over the years the discussions on the holding limit have affected the price of the shares, the trades involving the shares of the five SIFs did not attract the attention of the Romanian National Securities Commission (CNVM).

Bogdan Chetreanu, CNVM commissioner, said that the Romanian National Securities Commission has not yet reviewed this situation (ed. note: the trading in shares of the SIFs). He said that the vote concerning the draft law scheduled to be held on November 22nd is public information.

Still, the website of the Chamber of Deputies has not yet published the agenda of the day of November 22nd, and the officials of the Chamber said that the schedule of the meetings will only be made public on Thursday.

In 2009, PDL senator Ovidiu Marian proposed the elimination of the holding limit in the SIFs, but the Senate decided to raise it to 5%.

He is however optimistic on the project's passing in the plenum, next week, "provided the SIFs don't lobby once again and they let go of their privileges". Ovidiu Marian said that the raising of the limit to 5% is just a preliminary step towards its subsequent elimination.

Brokers are expecting that following the raising of the threshold, the shares of the SIFs would become more attractive to mutual and pension funds.

The presidents of the five SIFs have objections concerning this legislative proposal.

Ioan Cuzman, the president of "SIF Banat-Crişana" (SIF1), said that the draft bill is not good in its current form, but made no further comments.

Petre Pavel Szel, the president of SAI Muntenia, considers that raising the limit, won't make much of a difference for investors, for more than a month.

"The members of the Parliament don't have anything else to do", he said.

The president of "SIF Moldova" (SIF2), Costel Ceocea, considers that "the initiative should have come from the shareholders, instead of the Parliament".

The holding limit was set at 0.1%, in 1996, in their First Extraordinary Shareholder Meetings of the SIFs, when the five Private Property Funds (FPP) were turned into Financial Investment Companies. The reason for setting the limit of 0.1% was the fear of the PDSR (ed. note: the Romanian Social-Democrat Party) that 30% of the country's wealth - which had been allotted to the portfolios of the five SIFs - would end up being owned by foreigners.

In the summer of 2005, the holding limit was set at 1%, through an emergency ordinance, issued during the Parliament's holiday. The legislative draft which the Ordinance was based on had been approved by the Senate, but not in time to be put up for discussion in the Chamber of Deputies.

The SIFs were required to update their articles of incorporation to include the change of the holding limit from 0.1% to 1%, within 60 days from the passing of the Ordinance.