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The seats of the directors of the BSE are on shaky ground, after Friday's General Shareholder Meeting, which had on the agenda the creation of the Central Counterparty, (ed. note: CCP, an institution which will become mandatory for the derivatives market, starting in September), did not meet the necessary quorum of 50%.
SIF Moldova is considering summoning the General Shareholder Meeting of the BSE, in order to get the shareholders to decide on the idea to adopt the dual management system, and idea which it has actually been backing for quite some time now, after the Bucharest Stock Exchange said goodbye to derivatives.
Costel Ceocea, the chairman of SIF2 Moldova, said: "We are considering summoning the General Shareholder Meeting for the shareholders of the BSE to make a clear decision on the switch to the dual management system".
According to him, the shareholders of the BSE must be allowed to designate diligent officials which would be able to assign a clear mandate to the members of the Board of Directors.
Costel Ceocea said he was unhappy with the fact that the Board has not presented the shareholders with any alternatives to the Central Counterparty project: "The Board of Directors shows a lack of responsibility, based on the way they organized the General Shareholder Meeting. On the website of the BSE, only the notice to attend the General Shareholder Meeting is presented, without any additional materials. As a Director, you can't afford to not be diligent in performing your duties, regardless of the position of shareholders. All the administrators should take under consideration that this is not the kind of behavior that shareholders expect".
SIF Moldova is among the biggest shareholders of the BSE, together with SIF Transilvania (SIF3), SIF Oltenia (SIF5), funds controlled by Erste and by Franklin Templeton, which each of them owning stakes of 5% of the BSE.
• The Board of Directors of the BSE claims that it has done everything in its power to inform the shareholders about the Central Counterparty project and to get them to attend the vote on it
At the Extraordinary General Shareholder Meeting (the second summoning), shareholders with holdings of 29.83% have accumulated holdings of 29.83%, with some of them being extremely critical of the Board of the BSE.
"The management of the BSE did not want the creation of the Central Counterparty", some of the shareholders were saying on Friday, as they expressed their discontent at the fact that the directors did not promote the project of the Central Counterparty among shareholders and did not present them with materials that would support their proposed actions.
Lucian Anghel, the president of the BSE, declined to comment on the situation.
At the request of the BURSA newspaper, the representatives of the BSE provided us with the following statement: "The Board of the BSE did everything that was up to it, within the limits of its legal prerogatives, for the draft of the Central Counterparty, to be understood and be voted by the shareholders. The Board of Directors has contributed to increase of the share capital of the Romanian Clearing House with the maximum amount allowed through the articles of incorporation and has put the Central Counterparty Project on the agenda of two Extraordinary General Shareholder Meetings, together with the amendment of the articles of incorporation of the BSE. The creation of the central counterparty has not been required by the Board of the Exchange, but rather by the need to adopt some major European regulations, which Romania is a part of, and without which we will no longer be able to have a derivative market. We will continue to seek a solution, out of the options we still have available, in a very brief period".
In the hallways, at the location of the General Shareholder Meeting, the shareholders were saying that this time, it was the major shareholders that sabotaged the meeting, (the SIFs and Franklin Templeton), after two of the previous meetings were not held because the very small shareholders decided to participate, but without registering to vote.
SIF Transilvania attended the General Shareholder Meeting, according to the present shareholders, represented by Dan Simionescu, the president of Sibex, who had also summoned the shareholders of the latter in a General Shareholder Meeting, on Saturday, again for the same purpose of discussing the project of the Central Counterparty.
Costel Ceocea told us that SIF Moldova also had a representative with a clear mandate at the General Shareholder Meetings of the BSE and Sibex, especially since on Thursday, it actually called upon the shareholders of the Sibiu exchange to attend the meeting.
"It is surprising what has happened at the BSE, given that for a year and a half, we have been warning the shareholders that the aside from the statements in an unregulated action environment, we also need action on a formal level", the president of SIF2 also told us.
The General Shareholder Meeting of the BSE was supposed to decide the approval of the participation of the BSE in the share capital increase of the Romanian Clearing House (CCB) with 23 million lei and to empower the Board of Directors of the BSE to increase in cash the share capital of the Romanian Clearing House by a maximum of 10 million lei, depending on the state of the subscriptions of the other shareholders that will exercise their right of preemption as part of the share capital increase, approved by the Romanian Clearing House of Bucharest.
The Central Counterparty is required to have a share capital of at least 7.5 million Euros.
Another alternative for preserving the derivatives market would be resorting to the services of a foreign central counterparty. This option, however, also has very low odds, as it is rather expensive, especially considering the small size of the Bucharest derivatives market.
"The only alternative remains the involvement of the Romanian National Bank, in this project, but its implementation is also taking a lot of time", Costel Ceocea told us.
The request to increase the share capital of the Bucharest Clearing House came from the a group of shareholders which comprises the Association of Brokers and five brokerage firms (Finaco Securities, Confident Invest, Rombell Securities, Alpha Finance and Intervam).
Besides, the Associations of Brokers has actually presented to its members, prior to the General Shareholder Meeting of the BSE, the project of the Central Counterparty, to allow them to become acquainted with it before voting on it.
• The Board of Directors "in wait-and-see mode"
The failure of the Central Counterparty project may be the final straw, as an increasingly larger number of shareholders of the BSE are joining the faction unhappy with the current Board Of Directors.
The harsh reaction of the president of SIF Moldova is most likely coming after a lengthy dialog with the board of the BSE, behind closed doors.
Costel Ceocea, just like other shareholders of the BSE, seem to be exasperated by the "waiting strategy" of the Board of the Directors of the Bucharest Stock Exchange and are looking for action.
But the Board of Directors is just waiting and waiting... it has waited for nine months for Victor Cionga, whom it has dismissed after six more months, and now, for four months, it has been waiting for the new "wonder" managing director, that would lift it up out of the mud...
And it may still have to wait longer, if we the statements of Pole Ludwik Sobolewki, the former CEO of the Warsaw Stock Exchange are to be taken seriously. He said in a statement given to a Polish newspaper, that he will make a decision on the proposal he received from the BSE to become its Chairman, within two to three months.
Of course, another possibility is that things will move a lot faster, after the failure of the Central Counterparty project.
The Board of Directors is still waiting for the listings of the state, brokers are still waiting for the listings of private companies, and it is very likely that there will always be something to wait for.
Meanwhile, the government is seriously considering entering the shareholder structure of the BSE directly. That would be the first time when the authorities actually move faster than the private sector.
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