Bucharest Stock Exchange (BVB), the operator of the Romanian capital market, will reclassify listed companies by replacing the current 1st, 2nd and 3rd tier with two new ones, Premium and Standard. The BVB will also make changes in the reporting rules for listed companies.

“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,” said Ludwik Sobolewski, BVB CEO. “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,” he added.

With these changes, the BVB will be able to eliminate some companies which have been included in the 1st tier, although they don’t really qualify to be among the top companies listed, such as insolvent chemical producer Oltchim Ramnicu Valcea (OLT), aviation components producer Turbomecanica Bucuresti (TBM) or insolvent construction company Concefa Sibiu (COFI). These companies lack the size and the liquidity to be included among the top companies listed on the BVB.

According to the BVB’s new rules, 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. Other thresholds might be set by the BVB. The new structure will come into force after BVB will finish the promotion criteria.

Some 15 to 20 companies could currently qualify for the new Premium category, compared to 29 companies which are now listed in BVB’s 1st tier.

Continuous reporting

BVB will also change the reporting rules, in order to increase the visibility of issuers and the trading volumes. The provision that states that the current reports should be submitted by issuers only outside the trading hours will be eliminated. 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.

Issuers must also notify BVB at least five minutes in advance before making any release of current report that might impact the price of its shares. Another change says that financial instruments will no longer be suspended from trading during the general shareholders meetings.

“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”, Sobolewski explained.

The changes in BVB’s regulations have already been approved by Romania’s Financial Supervisory Authority (ASF).

The Bucharest Stock Exchange currently has 81 local companies listed on its main market with a total market value of EUR 18.4 billion. The total value of equity trading was EUR 158 million, in October 2014, 27% lower than in the same month of 2013. In the first ten months of this year, equity trading on the BVB reached EUR 1.95 billion (without public offers), up by 26% compared to the same period of 2013.

Andrei Chirileasa, andrei@romania-insider.com