TODAY: THE SELF-LISTING OF THE BSE An opportunity for the shareholders interested in the development of the stock market

• (Interview with Stere Farmache, the chairman of the Bucharest Stock Exchange)

Reporter: Do you think this is a good time for the listing of the Bucharest Stock Exchange, given the fact that we are going through a difficult period and that companies usually put a lot of effort into choosing the best moment for their listing?

Stere Farmache: Your question makes sense, but we are dealing with a technical listing and not an IPO where investors buy at one price and then have positive expectations concerning the evolution on the secondary market. This is a secondary public offer, not an IPO and we are not concerned about the market positioning of the Bucharest Stock Exchange. This is compounded by the fact that we don"t have any control over the future and the time when the crisis will end... We want to send a message to companies which most likely have reservations about getting listed on the Bucharest Stock Exchange.

Reporter: What expectations do you have from the listing of the Bucharest Stock Exchange?

Stere Farmache: The decision to list the Bucharest Stock Exchange was made more than two years ago, and is an initiative that began with the brokers and then gradually came to fruition, being implemented by the Board of the Exchange. So our expectations are to make the Stock exchange more visible, to allow existing shareholders to make an exit and to attract investor to the financial market. We are hoping to encourage companies that are still reluctant to get listed on the stock market. What we expect to achieve by this listing is to see a change in our shareholder structure. We are expecting a shareholder structure that would help the stock market develop. We are looking for shareholders that are more pro-active on the capital market.

Reporter: The listing seems to get the exchange closer to eliminating the 5% holding restriction for shareholders, because this would provide an incentive for potential investors to acquire larger stakes in the Stock Exchange.

The listing is also a deviation from the strategy of the former chairman of the Stock Exchange, Septimiu Stoica. His intentions were for the Stock Exchange to expand "by itself" and to conclude partnerships with other exchanges, whereas the current listing could lead to a deviation from the current rules by way of a persisting lobbying which would allow foreign exchanges to take over or acquire major stakes in the Bucharest Stock Exchange.

Stere Farmache: At the moment, the 5% cap protects the Stock Exchange from hostile takeovers. The Exchange does not rule out the idea of developing partnerships with strategic operators by allowing a core of shareholders that would be predominantly interested in the development of the stock market and obviously in turning out a profit.

The 5% threshold is set by law, but we are not ruling out the idea of openly and directly requesting the elimination of the 5% voting threshold, should we become aware of serious proposals from powerful European exchange operators.

I don"t see this threshold as a hurdle. The idea is that under any circumstances, the Stock Exchange should be able to rely on a group of shareholders that would support its development and that would be qualified to hold such a position. It would be premature to discuss anything of the kind at the moment. Most certainly, this threshold won"t prevent some changes in our shareholder structure.

Reporter: As chairman of the stock Exchange, what do you think would be the ideal profile of the shareholder of the BSE?

Stere Farmache: A shareholder of the BSE should be actively involved in its business, should understand its nature and support the development of the Exchange ... Basically such a shareholder would have to be interested in the development of the stock exchange.

Shareholders that already run other exchanges would obviously be of more interest to us, but we don"t discriminate against other types of shareholders.

It is worth mentioning that while the self-listing of a stock exchange would seem an unusual event 20 years ago, here it is happening now, and the first exchange that took this step was the Stockholm Exchange, OMX. Over the last decade, we have seen self-listings of exchanges of all sizes and on all continents.

Reporter: This argument doesn"t hold much weight, because over the last three years we have seen a crisis of the majors, of the major American banks, of the financial system, which clearly shows that they should not be used as a role model...

Stere Farmache: If stock exchanges invest in advertising the benefits that getting listed brings to companies, I do not see why the Bucharest Stock Exchange would do otherwise.

It is important for a stock exchange to be well positioned on the market, thus allowing it to access the funds of investors.