The Bucharest Stock Exchange wants to incentivize its employees and its management team with stock

• The mergers or acquisitions of other companies are out of the question

The management of the Bucharest Stock Exchange wants to conduct stock buyback programs in the coming years in order to motivate its employees and managers, according to the draft budget published by the BSE for 2012.

Valentin Ionescu, the former managing director of the BSE, told us that last year, he had proposed to the Board to buy back shares in the company, which would be then used to motivate the employees, but his proposal was rejected.

"I proposed to the former Board of Directors the buyback of 10% of the company's shares. 2-3% of those shares would be used as incentives for the employees of the BSE, to make them feel like they were part of the company, and the remaining shares would either be kept or cancelled".

The General Shareholder Meeting scheduled to take place on April 25th, the shareholders will discuss the proposal to buy back 76,740 shares of the BSE, representing a maximum of 1% of the share capital of the BSE, with a face value of 10 lei/share, at a minimum price of 20 lei and a top price of 50 lei, over a period of 18 months, starting from the date of the publication of the shareholders' decisions.

The investment schedule for 2012 mostly provides investment in IT infrastructure and the improvement of the current office space, and that the company will focus on organic development, but mergers or acquisitions of other exchange operators are not being considered.

The representatives of the Stock Exchange estimate an operating profit of 7.645 million lei, up 20% over 2011.

"The budget of the BSE for 2012 expects a 16% turnover increase, whereas expenses are expected to grow less than 15%", according to the previously mentioned report.

For this year, the BSE estimates a financial profit of 5.055 million lei, down 59% over 2011.

"After booking the profit tax, budgeted at 1.569 million lei, the net profit of the BSE, is estimated at 11.113 million lei, or a net profit per share of 1.45 lei", according to the published report.

In the next four years, the BSE plans to increase its operating profit by at least 10% YOY, and to maintain the dividend policy.

• The Bucharest Stock Exchange is betting on the success of the public offerings

The BSE expects its total sales to amount to 2.44 billion lei this year, as the revenues generated by the public offerings conducted by the Romanian state will amount to 3.3 million lei.

"Based on the pricing policy, applied in 2011, the total revenues resulting from the public offerings and trading on the regulated market, will amount to 20.45 million lei", according to the previously mentioned source.

Trading revenues are estimated to reach 21,804,000 lei, or 86% of the total operating revenues.

"The amount traded on the regulated stock market, considering the increase in turnover due to the listing of the stakes in Transelectrica and Transgaz and in the trading turnover generated after the IPOS of Romgaz, Tarom and Hidroelectrica, is estimated at 11.05 billion lei/year, up 11% over 2011", the aforementioned communiqué states.

The success of the public offerings scheduled for this year would increase trading turnover by 322,635,000 lei / year.

Thus, the total estimated revenues from the regulated spot market, excluding the revenues from the public offerings, are expected to amount to 17,148,000 lei.

Employee expenses are budgeted at 7.74 million lei, up 12% over last year. The salaries of the members of the Board and of the Special Commission are estimated to cost a total of 649,000 lei.

"The salaries of the members of the Board of Directors will remain constant compared to 2011, namely 3.700 lei/member", according to the published report.

The BSE estimates that marketing expenses for this year will amount to 2.104 million lei.

• This autumn's elections do not influence the macroeconomic indicators

The representatives of the BSE consider that even though this is an electoral year, still the elections will not have a major influence on the macroeconomic indicators, on the domestic capital market or on the privatization schedule.

"Our budget for 2012 was based on the successful completion of the public secondary offerings of Transelectrica and Transgaz and of the IPOs of Romgaz, Tarom and Hidroelectrica. Based on the aforementioned factors, we expect the capitalization of the BSE to increase by about 30%, in Euros, to almost 17 billion Euros, taking into consideration the successful listing of Romgaz, Tarom and Hidroelectrica in the second half of the year".

The stock market capitalization to GDP ratio is expected to reach 13% this year, up 10% over 2011, and 66% over the average of the European Union in 2011.

• The BSE hasn't forgotten about structured products

The management of the BSE is also considering "the development and the growth of the structured products segment, by expanding the list of underlying assets, as to what concerns their time, the features of the assets and their markets of origin, as the market for structured products had the fastest growth rate in the region in 2011. This proves the customer's increased interest in them", the aforementioned document states.

This year, the BSE plants to expand its offer of products available to investors, with the first Romanian ETFs (Exchange Traded Funds). Their investment policies are intended to allow them to fully or partially replicate the performance of a stock index of the BET family.

Also, the management of the BSE estimates a gradual increase in the turnover of the international segment of the alternative trading system of the BSE (ed. note: ATS).

"We want to be more selective in the stock offering. In this regard, we are first and foremost looking at expanding the number of foreign stock exchanges and economic sectors featured on the ATS International platform", the press release of the BSE says.

On the derivatives market, the BSE wants to continue attracting market makers, including for on the index-based futures contracts, in the context of new product launches and of the stocks included in the BET index being traded through nominee accounts.