The BSE goes shopping... for other exchanges

This year, the management of the Bucharest Stock Exchange wants to set aside five million Euros for acquiring stakes in stock exchanges in the neighboring countries, Valentin Ionescu, the General Manager of the BSE said in a meting with journalists. The manager of the BSE said that the management of the BSE has been talking to the officials of some of the exchanges in the region, and emphasized that the Bucharest Stock Exchange has not yet given up on its ambition to become a regional player.

"There have been some talks, but we can"t reveal more about them before they are completed. I can only tell you that you will be surprised if they do complete, possibly next week. When we drafted the budget for this year, we set aside 5 million Euros for this type of investments", Valentin Ionescu said.

The plans of the BSE to expand in the region go back a few years, since the exchange made a bid on the Ljubljana exchange, but had to bow out after it was outbid by the Vienna Stock Exchange.

Last week, the global expansion plans of the BSE seemed to have been endangered by the requests of several of its shareholders to cut the face value of its shares and to pay out the difference as an extraordinary dividend.

Octavian Molnar, a member on the Board of the Exchange, at the time protested against this project, which would have led to the decapitalization of the BSE, and warned that the company needed money to implement its plans to buy other exchanges.

Concurrently, market sources claimed that the Board of Directors of the BSE had discussed the option of buying about 5% of Sibex, which would have given it an edge in its negotiations to merge with the institution of Sibiu. The Romanian National Securities Commission (CNVM) has already lifted the restriction which prohibited the BSE from buying shares in Sibex.

"If we merge with Sibex, buy two-or three more exchanges in the region and bring the trading and settlement techniques up to the level of those used by the Western institutions, two or three years from now we will reach a daily turnover of 60 million Euros, surpassing those of exchanges of Budapest or Prague", Valentin Ionescu said yesterday discussing his views on the growth of the BSE.

The managing director of the Exchange said that there are no discussions on the potential sale of large blocks of BSE shares to similar foreign institutions.

"Those who wanted to make their exit from the BSE were able to do so more easily after it got listed. I have to tell you we had some very interesting shareholders come in. On the registration date, we had 1,333 shareholders, and their number increased since the listing, when there were just 331 of them", Valentin Ionescu added.

He said that it is still the task of the chairman of the Board, Stere Farmache, to summon a meeting which would discuss the proposals submitted by some of the shareholders of the BSE concerning the reduction of the face value of the shares of the BSE and the election of the members of the Board through the cumulative voting method. No meeting of the board on this matter has been summoned yet, Valentin Ionescu said yesterday.

Valentin Ionescu also said he has sent a request to the Romanian National Securities Commission concerning the extension of the nominee account system to all the stocks traded on the BSE, and that he hopes the Commission will at least approve the request for the stocks included in the BET and BET-FI indexes. The exchange could later begin the process of separating the settlement and trading parts of the ARENA system, meaning that brokerages would no longer need to have a nominee account for each of their customers" custodians. Valentin Ionescu considers that this technical aspect affects the liquidity of trades involving the Proprietatea Fund, the only stock that is traded using nominee accounts.

"This would increase liquidity, particularly because it would make it easier for major brokerage firms to do their jobs", the manager of the BSE explained.