Financial Supervisory Authority (FSA) has approved a number of changes proposed by Bucharest Stock Exchange (BVB) to BVB Rulebook for Market Operators in order to increase the visibility and trading turnover on the regulated market.
Changes to the rulebook include among others the elimination of the provision that states that the current reports should be submitted by issuers only outside the trading hours. Once this change enters into force, the issuers will be able to send releases and current reports as soon as they are available to them, also during the trading session, but no later than 24 hours following the occurrence of the event in question.
Moreover, if during a trading session an issuer is to submit a release / current report that contains information that could significantly impact the price / yield or investment decision, it must notify in advance BVB at least five minutes before sending the release / current report.
"Autumn 2014 brings another wave of changes that will become next milestones in the development and modernization of the Romanian capital market. All companies listed on the regulated market are now allowed - and strongly encouraged - to release current reports as soon as they are ready to go. It is in the interest of issuers to feed the market with information, on a continuous basis, and not to wait until the trading session is ended or to submit the reports only before it starts. Continuous reporting creates liquidity, and minimizes risk inherent to the possession of price sensitive information. It also imposes new attentiveness on the investors, making them fully aware participants of the market”, stated Ludwik Sobolewski, BVB CEO.
Another improvement to the BVB Rulebook - Market Operator stipulates that issuer’s financial instruments will be no longer suspended from trading during issuer's General Shareholders Meeting.
The above-mentioned changes will come into force on November 10, 2014.
Other changes to the BVB Rulebook – Market Operator aim to restructure the regulated market, by replacing tiers 1, 2 and 3 for shares with two new tiers - Premium and Standard.
Along with the general criteria that shares must meet for listing on the Regulated Market, the free float market value for issuers that wish their shares to be admitted to the Premium tier will have to equal at least EUR 40 million.
“By transforming the market segmentation we continue the line of the developments which was initiated earlier this year by easing the admission criteria and conditions for newly listed issuers. Now the investors will have a new segmentation of the market, which is far more legible and understandable. This will be a second method of a quick apprehension of the assets available on the market, after the set of indexes, which remain the main tool and alphabet of the market and it performance”, said Ludwik Sobolewski, BVB CEO.
In order for the issuer’s shares, including investment companies, to be admitted to Premium Tier, one of the following alternative criteria has to be met:
a) issuer is one of BVB’s most liquid companies;
b) issuer’s average free-float capitalization for the last 3 months is greater than a certain value set by BVB;
c) for issuers that do not match the criteria provided in subsection a) or b) but who have liquidity ratio greater than the threshold established by the BVB, - the issuer will have to have signed a contract with a market maker who will support the market liquidity of shares.
Thresholds for the above-mentioned criteria will be further determined by BVB.
BVB may approve the admission or upgrade of shares to the Premium Tier on a case-by-case basis, even when the shares in question do not fulfill all the necessary requirements. Such exception can be granted only in cases when BVB ensures that such an admission or upgrade will not compromise the objectives behind creating the Premium Tier.
Tiers 1, 2 and 3 classification will be moreover removed for rights and corporate bonds category. These financial instruments will be classified as rights and bonds, without imposing any tier differentiation upon them.
The new structure will come into force following BVB’s decision establishing the parameter values for the promotion criteria for the Premium Tier shares. The date of entry into force of this new structure will be determined by the CEO of the Bucharest Stock Exchange.
Once the new structure enters into force, shares already admitted to Tier 1 and those that meet the upgrade requirements will promote to Premium Tier without any formality.
Shares that do not met the requirements for Premium Tier and financial instruments currently admitted to Tier 2 and 3 will be automatically admitted to the Standard Tier.
The new amended Rulebook for Market Operators will also introduce a number of provisions relating to the new BVB Corporate Governance Code. All listed issuers are encouraged to comply with the new code.
Following the entry into force of the new Rulebook, the issuers must submit to BVB a current report whenever they will be in a situation to not comply with one or more provisions of the Corporate Governance Code.
For issuers that comply with the Code of Corporate Governance, BVB may adopt measures to reward them, such as: reducing maintenance fees, including the issuers in a dedicated index, awards, promotion of the issuers during some events or publications etc.
BVB will conduct analyzes on issuer’s compliance with the Code of Corporate Governance, and the results of these analyzes can be made public.
The issuer shall include in the Annual Report a statement regarding their compliance with Bucharest Stock Exchanges’ Code of Corporate Governance.
“In the common interest of issuers and investors we are also meaningfully changing the system of enforcement of the corporate governance. The new system treats any discrepancy from the established rule, stemming from Corporate Governance Code, as subject to current reporting, via current reports. Investors must have an accurate and always updated information about the state of corporate governance in listed companies. For companies, this is another chance to enhance their profile, get new investors and more of confidence and trust, which serves the business - if the comply, with no exceptions, with the corporate governance code. The new corporate governance code itself will be very soon published by the BVB, for important consultation”, stated Ludwik Sobolewski.
Changes to BVB Rulebook regarding the corporate governance provisions will come into force on a date determined by the CEO of BVB, following the approval of the new Code of Corporate Governance.
“I would like to thank the chairmanship of the ASF and the team of specialists within the ASF for their fruitful contribution to the final shape of those substantial changes, decided by the Board of the BVB and taking Romanian capital market into a new phase of development", said the CEO of the Bucharest Stock Exchange.