THE EVALUATION OF THE EXECUTIVE OF THE BSE, AFTER ONE YEAR Sobolewski, one year after his appointment

Luck seems to have smiled down on Ludwik Sobolewski, in his first year as CEO of the BSE: the government helped him with IPOs, the Financial Oversight Authority with changes in the secondary legislation and fee cuts, and the Parliament, by eliminating the Rasdaq market.

All that's left for him to do is to take care of his own image, which he does so well, that a significant portion of the market community grants him the merits for the projects pertaining to the stock market and overlooks his arrogance and disregard of the local regulations.

Still, whereas one year ago, Ludwik Sobolewski came to Romania carried by a wave of enthusiastic support, now there are brokers that aren't shy about criticizing him openly, and some of those who explicitly supported him in the beginning, now avoid publicly expressing their opinions about his work.

During the first year of his term, the CEO of the BSE has achieved a major performance - "enthralling" the Board of Directors. Whereas his predecessor, Victor Cionga, was evaluated and dismissed after just half of his term had elapsed, the thought of assessing the activity of Sobolewski did not even cross the minds of the Board of the BSE.

For that matter, Sobolewski's ideas encounter little resistance on the Board of the Exchange, and president Lucian Anghel constantly praises him (some people say that in his case, the position of "president" should be put in quotes).

Adrian Simionescu, the president of "Vienna Investment Trust", who has previously criticized Ludwik Sobolewski, told us he is unhappy with the "performance" of the CEO of the BSE. "The IPO of Electrica had been in the works since before Mr. Sobolewski joined the BSE, and the separation of the trading and post-trade systems was the project of the Central Depository, not of the BSE. Considering his commitments on what he was going to achieve in the Romanian stock market, I think that his results are relatively unsatisfactory. I think that there are many things that could have been done, going past some very pretty and sumptuous statements".

On the other hand, Eugen Voicu, the former president of the Supervisory Board of Certinvest and majority shareholder of the company, says that he is on the side of those who praise what Mr. Sobolewski has done during his term. "I won't say that he couldn't have done more, but considering the local context and what we have lived through so far, I think that he has taken some steps forward", Mr. Voicu said, and he added: "I don't want you to think that I appreciate his activity very much, but I can't say I am disappointed either. I am somewhere in between".

Grigore Chiş, the CEO of SSIF Broker, said that, after the arrival of Ludwik Sobolewski, he noticed a change for the better when it comes to the BSE, on every level.

He told us: "Some improvements have been seen when it comes to the promotion of the market abroad, financial education campaigns have taken place, which were initiated by the CEO of the BSE and which I've been told he wants to continue, progress has been made when it comes to promoting the BSE among issuers and also, one year into the mandate of Sobolewski, the BSE has a post-trade service". Grigore Chiş further says: "I hope that the reforms of Sobolewski will also extend to the Central Depository".

Alin Brendea, deputy general manager at Prime Transaction says that broadly speaking, the term of Mr. Sobolewski could be seen as a positive period for the Romanian stock market. "His work places him among the top executives of the BSE, but obviously, the Romanian stock market still has many aspects that need to be perfected or even significantly < renovated >", he said.

Through the contract signed with the BSE, Ludwik Sobolewski has pledged to increase the company's turnover by 50% in 2014, get five new issuers listed in the first twelve months of his term and to improve the free-float by 10%.

In the last year, only three new companies have made their debut on the Bucharest Stock Exchange, all of them state-owned, as the only private IPO - AdePlast - was a resounding failure.

On that point, Sobolewski gets "three out of five", through no contribution of his own.

It wouldn't be out of the question for Sobolewski to count the transfers of companies from the Rasdaq to the BSE as achievements, when assessing whether he met the objectives, based on which he gets his annual bonus.

The daily average turnover, between September 2013-October 2014, was 57.54 million lei, up 80% between September 2012 and October 2013.

But the "gifts" from the state, which had been planned for a while now, as they had been set through the agreement with the IMF, have significantly contributed to improving the liquidity of the BSE.

In 2013, the average daily turnover, excluding the IPOs of Romgaz (SNG) and Nuclearelectrica (SNN) and the trades in their stocks, was 35.2 million lei, up 25% over 2012, when the average was 29.74 million lei.

Liquidity doesn't seem to have seen any progress this year either, when considering it "outside help". Had it not been for the IPO of Electrica and the subsequent trades on that issuer, and without the trades involving shares in SNG and SNN, the average turnover up to the present day would have been just 35.57 million lei, just 1.5% higher compared to last year.

One of the performance criteria for 2014, set through the Ludwik Sobolewski's employment contract is to increase the amount of trades involving stock, mutual fund shares, warrants and structured products by 50% compared to 2012. 2014 is not over yet, but at this point, it would be worth mentioning the strange contractual clause which favors Sobolewski, as this indicator is being measured against 2012, rather than 2013.

Up until now, concrete achievements are kind of taking their time in making their presence felt.

One of Ludwik Sobolewski's "pet" projects was the gathering of a group of experts that have published the document "Eight systemic barriers to the development of a modern stock market in Romania''.

The Board of the ASF recently passed certain amendments to the secondary legislation in order to eliminate some of these "barriers", and the Ministry of Finance has passed a project to amend the law of the stock market no. 297/2004.

A task that Sobolewski has carried out successfully was the restructuring of the staff of the BSE, at the end of last year, which is why he got a bonus of 150,000 Euros in 2013. Once he saw things go his way, Sobolewski greenlit new hirings, which drew public criticism from Dan Paul, the vice-president of the BSE: "Since the Bucharest Stock Exchange has replaced its CEO, two or three more Poles have come in, I don't know how many Romanians and a few journalists. No offense, but I don't think they should be over there".

In his early press conferences, Sobolewski has also taken credit for the separation of the trading and post-trade systems, even though that was a project of the Central Depository. The segregation of the accounts was achieved starting on October 6th, concurrently with the shortening of the settlement cycle from three to two days, which sparked concerns over failed settlements of trades.

Pole Ludwik Sobolewski was appointed as CEO of the BSE in early July 2013, and he took over the executive management almost two months later, following his validation on August 21st, by the Financial Oversight Authority (ASF). He also led the Warsaw Stock Exchange for seven years, between 2006 and 2013, whence he was dismissed following a row revolving around a conflict of interest.