BVB in talks with peer bourses on regional ETF

By Nicoleta Banila

Adrian Tanase CEO the Bucharest Stock Exchange, BVB

In the beginning of 2018 Romania’s financial regulator ASF approved Adrian Tanase’s appointment as CEO of the Bucharest Stock Exchange, BVB, for a four-year term. BVB is the biggest stock exchange in Southeast Europe (SEE) with a market capitalisation of over 36.3 billion euro.

It has been a few months since you took over as CEO of the BVB. What are your main short and mid-term goals?

Bucharest Stock Exchange (BVB) managed to perform positively in a diverse and complex environment in the first half of the year. First, as far as the equities segment is concerned, two listings occurred: a technical one by the furniture producer Elvila and an IPO by Purcari Wineries, the first company from the Republic of Moldova to be listed on BVB. […]

In an ever more complex international and national environment, the local market has also experienced some turbulence as we witnessed a market re-adjustment towards the end of the first half. Nevertheless, the index including the dividends went up by 11%, this two-digit growth rate placing Romania among the best-performing markets within EU.

The capital market is not only about numbers and cents despite popular belief evangelizing it as such. To me, one of the best news from the first half was when global index provider MSCI announced it had improved several criteria regarding the local capital market, such as market regulation, information flow, and trading, proving our projects are on the right track and that investors’ perception towards the local market has improved.

For the second half of the year, the main objective of BVB is to bring forward to its shareholders a proposition to implement a central counterparty clearing house (CCP), which is the key financial institution that will help us re-launch the derivative market. We closely collaborate with the supervision authorities to have a solid business plan presented by year-end, as we aim to have the CCP launched by the end of 2020. As short-term goals, we will keep on developing the market to the best of our abilities so that investors can soon take advantage to the fullest of lending operations, short-selling trading or a more flexible framework for OTC transactions.

Do you think the BVB will fulfill the eligibility criteria for an emerging market in 2018?

The upgrade to the Emerging Market status is a consequence of our strategy, and should not be seen as a goal by itself. By improving the market liquidity, increasing the number of investors, and bringing more companies to the Main Market, all the criteria needed to see Romania promoted to the next level will be fulfilled and, as a consequence, the global index providers will include Romania in the category of Emerging Markets. Whether it happens this year or in the following years comes second in importance. […]

What are your expectations regarding IPOs of private and public companies by the end of 2018?

We have ongoing negotiations with the finance ministry to issue a bill allowing the state to subsidise half of the listing costs for the new companies planning to get listed. Of course, the number of new listings matter, surely the size of the deals counts too, but what really matters at the end of the day is that the local capital market gains robustness, for we do not operate only with money but also with trust. Needless to say, more listings, both IPOs and SPOs, and more bonds issues will start taking place once companies and investors solidify the level of trust in the local economy and have a positive outlook for the future. We are in talks with other stock exchanges from Bulgaria, Hungary, the Czech Republic, also Poland, in order to create a regional ETF, which could be listed on international markets. We want to widen the possibilities offered to those investors who do not have a trading account opened in this region or who do not want to buy solely what Romania has to offer.

How does the political and fiscal uncertainty in Romania affect investors and BVB’s development?

Agility seems to be the key to performing under enormous stress load and complex, rapidly changing situations as we are experiencing nowadays in both domestic and foreign markets. At BVB, we are constantly adjusting to different market conditions to not only meet but also exceed investors’ expectations.

Obviously, political stability, both domestic and foreign, would help any stock exchange advance at a faster rate for uncertainty has killed more trades than any other fear investors may have.