Investment banks trade Romanian shares on parallel markets

Foreign investment banks have started to offer their customers the possibility of trading Romanian shares on their own markets, in parallel with the market operated by the Bucharest Stock Exchange (BSE).
Currently, monthly transactions worth at least several million euros are sealed outside the Bucharest Stock Exchange, known until recently as the only place where shares such as Petrom, BRD or Banca Transilvania can be bought and sold.
The value of deals carried out on the BSE plummeted this year amid the international markets crisis, whereas on parallel markets the value of transactions with Romanian shares seems to be rising. Deals with listed securities, which include Romanian shares, have been conducted outside the Stock Exchange for several years, but they were regulated and have started to rise since the end of last year, according to market specialists.
Pursuant to the new EU financial market regulations, which came into effect on November 1, 2007, known as the MiFID directive, banks and brokerages are allowed to “internalise” transactions, namely to operate a deal between a buyer and a seller without the operation “going through” a market.
BSE brokers have not operated any “internal” transactions, according to market information, but foreign banks did.
Last month, “Austrian” banks only carried out transactions worth at least 4 million euros outside the stock market, according to the data they reported to the Vienna stock exchange.
Deals on the Austrian Stock Exchange may be, however, only the tip of the iceberg as such deals with Romanian shares are also operated on the London financial markets, which is by far Europe’s biggest, according to CNVM (National Securities Commission).
The stated purpose of over-the-counter deals being regulated is to increase competition among financial markets and lower trading costs.
Although transactions conducted outside the stock market theoretically entail an exchange of ownership rights, the change does not appear for the time being in the shareholder registry of the respective companies, operated by the Central Depository. Thus, the real owners of shares probably appear only in the servers of banks operating the internal transactions. “The Depository Code does not allow for such deals for the time being. We drew up regulations for such operations, but they haven’t come into effect yet. We haven’t operated any ownership transfers for over-the-counter transactions and no such transfer has been requested,” said Adriana Tanasoiu, general manager of the Central Depository.
The deals carried out on BSE parallel markets were reported, in line with EU regulations, to the domestic market supervisory body, the National Securities Commission. However, at ZF’s request, the commission did not provide any data on the volume of the deals it was informed about.