The Competition Council, notified on the matter of the Central Depository

A complaint about the unfair practices of the Central Depository seems to have reached the Competition Council, as illustrated by the official response received following a request of our paper.

Our editors asked the following question to the Competition Council:

"Can you confirm that you have received a notification concerning the level of the fees that the Central Depository has imposed after its latest Meeting of Shareholders, for companies that want to move the records of their shareholders from Bucharest to the Depository of Sibiu?", to which the Council replied:

"The Council of Competition confirms that it has received a notification concerning the capital market and its ancillary services, which are currently under review", without providing any additional details, saying that it could not do so at this stage of the procedure.

However, our sources claim that this notification concerns the fee of 5 RON/shareholder that any issuer which wants to switch from the BSE to the Sibex Exchange would be required to pay to the Depository.

Essentially, this fee would prevent any major issuer from crossing over.

For instance, the five Financial Investment Companies (SIFs) each have 7 to 9 million shareholders. Multiply that by five, you get 35 to 45 million lei.

So any of the SIFs would need to pay approximately 10 million Euros to move from one exchange to the other?!

The case of the SIFs is more than just a "what if" situation; SIF Oltenia has already announced it opted for the Sibiu Exchange, SIF Muntenia wants to try a dual listing, and SIF Transilvania, through its president Mihai Fercală, has publicly stated that he favors the Sibiu Exchange.

The interesting thing is that SIF Oltenia and SIF Muntenia have no contract with the Central Depository, and the operation of transferring from the BSE to Sibex got stuck because the CNVM has not yet issued any guidelines applicable to this situation.

Which raises the question: even though there is no contract, will the Central Depository demand ten million Euros to allow those issuers to transfer to another exchange?

Judging by the actions of the now defunct Romanian Shareholder Registry, - a rather similar entity - yes, most likely the Depository will demand those payments.