Valentin Ionescu, BSE: "All brokers will be ready to trade the shares of the Proprietatea Fund"

• Most brokerage firms are already running tests with the Central Depository

The general manager of the Bucharest Stock Exchange, claims that the requirements that brokers need to fulfill to be able to trade shares of the Proprietatea Fund through nominee accounts by January 25th are minimal. The manager of the BSE stressed that brokers were made aware last year that they needed to perform the internal testing needed for trading through nominee accounts and warns that some brokers which are still in the market have been working through nominee accounts on the Rasdaq, and are familiar with them. Ionescu considers that the confusion among brokers caused by the rush they must operate in to prepare for the implementation of nominee accounts arose "out of nothing".

The general manager of the BSE said: "Brokers knew since the end of 2010 that they needed to perform certain procedures for this purpose. The legislative changes mean that they now need to receive a technical certification from the Depository and from the Bucharest Stock Exchange.

As always, all this madness (ed. note: revolving around the fact that the Depository has not yet issued any technical permits and some interpretations of the legislation) has occurred over nothing. It has been overblown. Why do I say that? We"ve had nominee accounts in Romania on the Rasdaq market, which has already existed for around ten years. Many of the brokers that worked in the past with nominee accounts are most likely still on the market.

Let"s go back in time a little. Nominee accounts have been available since 2008. Tests for the use of the nominee accounts have been available within the system since 2008. Anybody who wanted to see how nominee accounts work, had over two and a half years to do so, without any problems. Erste Bank and structured products are being traded through nominee accounts. The Romanian National Securities Commission (CNVM) has decided that brokers need to receive a technical certification from the Depository and the Exchange to be allowed to trade shares of the Proprietatea Fund through nominee accounts, after we sent them a very clear memo on the minimal criteria that they need to fulfill to qualify for receiving the technical certification. We"re talking about things which are relatively easy to do, which, besides, have been done each time the Arena system was upgraded etc".

The management of the Central Depository announced last week that it has not yet validated any brokers to trade shares of the Proprietatea Fund via nominee accounts, claiming at the time that the amendments to its own code had not received all the necessary approvals. The announcement, made just as there are only three weeks left until the listing of the Fund, has raised questions on whether brokers would succeed in implementing the procedures in the brief delay left until the listing of the Fund. The CNVM later approved the Code of the Central Depository and issued a decision stating that brokers needed to be certified by the Bucharest Stock Exchange and the Central Depository, after having first performed testing of trading using nominee accounts. The decision of the Commission does not specify for how long the tests should be performed, unlike one of the provisions of the Regulation 5/2010 which some brokers construed as meaning that testing of the nominee account system would have to last three months prior to using it for trading.

Even though some brokers have accessed the test system made available by the Central Depository, the management of the institution was reluctant in disclosing the exact number of brokers that have "gotten busy".

Valentin Ionescu, who also serves as chairman of the Central Depository, said that most brokerages have begun running tests and said he was confident that they would all successfully trade shares of the Proprietatea Fund using nominee accounts, including the three firms that haven"t traded Erste stock using nominee accounts. However, he did not say how many of the 65 domestic brokerage firms are now running tests using the Central Depository.

"According to data from the Central Depository, most brokerages have connected to the institution"s test system", Ionescu said, who added: "I don"t see the big problem, I was a broker myself and I know how things work, I"ve worked with nominee accounts on the Rasdaq market and on other regional markets. The requirements for accessing the system and simulating trades using nominee accounts are minimal. Short-selling and its auditing are treated separately during testing because it is not required for all brokerages. The Proprietatea Fund can be traded without short-selling, but the latter is important for market makers".

The Proprietatea Fund is expected to begin trading on the Bucharest Stock Exchange in less than two weeks, on January 25th. According to some sources, the CNVM has decided that the shares of the Fund would be traded using nominee accounts, at the request of "Franklin Templeton".