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BULGARIAN CAPITAL MARKET AND THE ROLE OF BULGARIAN STOCK EXCHANGE

BULGARIAN CAPITAL MARKET AND THE ROLE OF BULGARIAN STOCK EXCHANGE. 7 th INTERBALKAN FORUM OF BANKING ASSOCIATIONS Sofia, May 4 th Ivan Takev, BSE-Sofia. Regulatory environment. Harmonization with EU directives has been completed

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BULGARIAN CAPITAL MARKET AND THE ROLE OF BULGARIAN STOCK EXCHANGE

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  1. BULGARIAN CAPITAL MARKET AND THE ROLE OF BULGARIAN STOCK EXCHANGE 7th INTERBALKAN FORUM OF BANKING ASSOCIATIONS Sofia, May 4th Ivan Takev, BSE-Sofia

  2. Regulatory environment • Harmonization with EU directives has been completed • Financial Supervision Commission guarantor for market stability • BSE Rules & Regulations in line with new developments • Corporate governance principles are widely implemented • New investment vehicles were introduced (pension funds, insurance companies, mutual funds, REIT’s)

  3. Steady market growth /2001-2007/ • Market capitalization of the BSE reachedEUR 9 billion (35% of GDP)

  4. Steady market growth /2001-2007/ • SOFIX increased by 1 300% in the last 5 years

  5. Steady market growth /2001 – 2007/ • Average daily turnover doubled over the last two years

  6. Listed Companies Number of companies traded: on the Official Market – 17; on the Unofficial Market – 339 Market Cap-EUR 2,8 billion ; Market Cap-EUR 7 billion New listings in 2006 : New listings in 2007( April) -Shares- 18 -Shares-SPV’s 6 (REIT’s &Securitization of Receivables) -Shares-Public Comp. 11 -IPO 7 -IPO 2 -Bonds 10 -Mutual Funds 19 -Bonds 28 Capital increases 48 Capital increases 13

  7. Investment oportunities • Capital increase through issue of shares • IPO’s • Bond issues • REIT’s - driving force is the boom in the real-estate sector • Mutual funds – getting to be more and more popular • Municipal bond issues – long-term investment,decentralization accelerates this process • Venture capital and equity funds – preparing for the big leap • Segment for small and mid-size companies – for financing risky, innovative projects

  8. Corporate Governance • A code In force since January 2007 • Incorporates the best practices and standards, incl.OECD principles • Mandatory for companies listed on the Official Market • A National Corporate Governance Code will be adopted soon

  9. But there are problems to tackle… • Market is still quite small • Low free-float and low liquidity • Limited number of IPO’s • Limited offer of products • Privatization is at its end – few remaining potential candidates • Lack of a derivatives market

  10. Looking ahead • BSE designed an action plan to attract new listings, to enhance liquidity and tointroduce new services • Implementing new technologies will be the major task in 2007 • Launching of a derivatives market is the next big step • Finding a good partner remains our strategic goal

  11. Consolidation process • Harmonized listing procedures • One set of rules • Common trading platform • Cross-membership • Single point of liquidity • Efficient clearing & settlement process

  12. The preferred model would… • Preserve the national identity and specificity • Abide to local regulations • Introduce know-how and technological innovations • Contribute to the growth of the local market • Give direct access to foreign markets

  13. Conclusion • Regional co-operation is necessary • Consolidation of the markets makes them more visible and competitive • MiFID will put an additional strain on stock market operators • ECN’s will compete with exchanges • New challenges will call for new strategies

  14. Thank you for your attention

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