ROMANIAN NATIONAL SECURITIES COMMISSION
Annual Report 2012
Bucharest, 2013
ROMANIAN NATIONAL SECURITIES COMMISSION
Annual Report
2012
Report on Budget Execution
Auditor’s Report on Budget Execution
Bucharest, June 2013
TABLE OF CONTENTS
Page ANNUAL REPORT I. ROMANIAN NATIONAL SECURITIES COMMISSION 1. PRESENTATION AND CORE OBJECTIVES 1 2. ROMANIA’S CAPITAL MARKET 3 3. ACTIVITY 5 3.1. REGULATION 5 3.1.1. Regulations issued by R.N.S.C. 5 3.1.2. Regulations issued by capital market institutions and approved by R.N.S.C. 16 3.1.3. Draft legislation issued by other authorities and reviewed by R.N.S.C. 17 3.2. AUTHORISATION 18 Authorisation and registration of regulated entities 3.2.1. 18 with the R.N.S.C. Public Register 3.2.2. Authorisation and approval of market operations 26 3.3. OFF-SITE AND ON-SITE SUPERVISION 30 3.3.1. Supervision of regulated entities 30 3.3.2. Supervision of securities issuers 36 3.3.3. Supervision of financial instruments trading 42 3.3.4. On-Site Inspection 45 3.3.5. Legal Activity 48 3.4. PUBLIC INFORMATION AND INVESTOR PROTECTION 52 3.4.1. Supervisory disclosure 52 3.4.2. Information of public concern 52 3.4.3. R.N.S.C. publications and other communication media 53 R.N.S.C. COOPERATION WITH OTHER ROMANIAN PUBLIC 3.5. 55 INSTITUTIONS AND AUTHORITIES 3.6. INTERNATIONAL RELATIONS 56 3.6.1. Relationship with European Union institutions 56 3.6.2. Relationship with other international bodies 62 Notifications received by R.N.S.C. from competent authorities 3.6.3. 64 of EU Member States
II. THE ROMANIAN CAPITAL MARKET 1. DEVELOPMENTS 69 2. REGULATED MARKETS 75 2.1. THE BUCHAREST STOCK EXCHANGE 75 2.2. SIBEX - SIBIU STOCK EXCHANGE 80 COMPARISON BETWEEN REGULATED MARKETS IN ROMANIA AND 2.3. 84 SIMILAR MARKETS IN OTHER EU MEMBER STATES 3. ALTERNATIVE TRADING SYSTEMS 90 3.1. BUCHAREST STOCK EXCHANGE - System operator 90 3.2. SIBEX - SIBIU STOCK EXCHANGE - System operator 92 4. THE RASDAQ MARKET SECTION 93 5. SECURITIES ISSUERS 95 6. BROKERS ON REGULATED MARKETS 97 7. COLLECTIVE INVESTMENT UNDERTAKINGS 100 8. FOREIGN INVESTMENTS ON THE CAPITAL MARKET 112 9. CLEARING AND SETTLEMENT SYSTEMS 115
i
9.1. THE CENTRAL DEPOSITORY 115 9.2. THE SIBEX DEPOSITORY 118 9.3. THE ROMANIAN CLEARING HOUSE 119 9.4. THE BUCHAREST CLEARING HOUSE 121 10. THE INVESTORS COMPENSATION FUND 123
III. ANNEXES Investment firms authorised and registered with Annex 1 127 the R.N.S.C. Public Register as of 31.12.2012 Credit institutions - Romanian legal persons registered with Annex 2 129 the R.N.S.C. Public Register as of 31.12.2012 Asset management companies authorised and registered with Annex 3 130 the R.N.S.C. Public Register as of 31.12.2012 Open-end investment funds authorised and registered with Annex 4 131 the R.N.S.C. Public Register as of 31.12.2012 Closed-end investment funds registered with the R.N.S.C. Public Register Annex 5 133 as of 31.12.2012 Financial investment companies registered with the R.N.S.C. Public Register as Annex 6 134 of 31.12.2012 Annex 7 Depositories registered with the R.N.S.C. Public Register as of 31.12.2012 135 Annex 8 Training bodies certified by R.N.S.C. as of 31.12.2012 135 Annex 9 Natural person investment advisors as of 31.12.2012 136 Annex 10 Legal person investment advisors as of 31.12.2012 136 Annex 11 Valuators registered with the R.N.S.C. Public Register as of 31.12.2012 137 Investment firms from other EU Member States registered with Annex 12 137 the R.N.S.C. Public Register as of 31.12.2012 Credit institutions from other EU Member States registered with Annex 13 137 the R.N.S.C. Public Register as of 31.12.2012 Undertakings for collective investment in transferable securities from Annex 14 138 EU Member States whose units are distributed in Romania as of 31.12.2012 Annex 15 Performance indicators of open-end investment funds in 2012 144 Annex 16 Performance indicators of closed-end investment funds in 2012 147 Annex 17 S.I.F. portfolio structure and evolution in 2012 versus 2011 147 Annex 18 S.I.F. key figures in 2012 versus 2011 150 Annex 19 Consolidated S.I.F. portfolio structure 151 Annex 20 Fondul Proprietatea key figures in 2012 versus 2011 152 Annex 21 Market shares of asset management companies in 2012 152
REPORT ON BUDGET EXECUTION 155 AUDITOR’S REPORT ON BUDGET EXECUTION 165
ii
List of tables
Table Page 1. Regulations issued by R.N.S.C. 9 2. Instructions issued by R.N.S.C. 11 Amendments to regulations issued by capital market institutions and approved 3. 16 by R.N.S.C. 4. Draft legislation issued by other authorities and reviewed by R.N.S.C. 17 Investment firms which notified their intention to provide investment services 5. 20 in other EU Member States 6. Prospectuses for the public offering of shares approved in 2012 27 7. Prospectuses for the public offering of bonds approved in 2012 28 8. Evolution in the number of public offerings in the period 2008-2012 29 9. Evolution in the value of public offerings in the period 2008-2012 29 10. Sanctions enforced in 2012 with respect to investment firms 31 11. Requests for information received from other public institutions 32 12. CIUs as of 31.12.2012 33 13. Evolution in the number of Securities Registration Certificates by underlying operation 38 14. Complaints received by R.N.S.C. with regard to issuers compliance 42 15. Requests for information received from other State institutions 42 16. Number of financial instruments on B.S.E. 43 17. Number of derivatives contracts on SIBEX 44 18. Main themes of inspections conducted in 2012 46 19. Sanctions enforced in 2012 following inspections 47 20. Requests for information submitted/received in 2012 63 21. Evolution of B.S.E. and RASDAQ indexes in 2012 73 22. Evolution of futures trading on B.S.E. 78 23. Number of futures contracts by maturity dates 79 24. Number of futures and options contracts traded on SIBEX in 2012 81 25. Contracts traded on SIBEX in 2012 83 26. Market capitalisation of main European exchanges in 2012 versus 2011 85 27. Derivative indexes on European markets in 2012 86 28. Evolution of main European stock indexes in 2012 versus 2011 87 29. Transactions executed on the B.S.E.-operated A.T.S. 90 30. Transactions executed on the SIBEX-operated A.T.S. 92 31. RASDAQ listed companies 94 32. Structure of issuers listed on the B.S.E. regulated spot market 96 33. Structure of transactions executed by brokers in 2012 97 34. Participants in the B.S.E. trading system 98 35. B.S.E. brokers in 2012 98 36. SIBEX and B.S.E. brokers in the period 2008-2012 99 37. SIBEX brokers in 2012 99 38. Number of investors in open-end investment funds in 2012 versus 2011 101 39. Net asset values of open-end investment funds in 2012 versus 2011 101 40. Market shares of open-end investment funds in 2012 versus 2011 102 41. Number of investors in closed-end investment funds in 2012 versus 2011 104 42. Net asset values of closed-end investment funds in 2012 versus 2011 104 43. Market shares of closed-end investment funds in 2012 versus 2011 104 44. S.I.F. capitalisation in the period 2011-2012 108 45. Evolution of the P/E Ratio of S.I.F. shares 109 46. Net asset values of S.I.F. 110 47. Fondul Proprietatea shareholder structure in the period 2011-2012 111 48. The net asset value of Fondul Proprietatea 111 49. The portfolio structure of Fondul Proprietatea 111 50. Share sales and purchases by non-residents according to home country 113 51. Share sales and purchases by non-residents according to line of business 114 iii
Table Page 52. Registry activities of the Central Depository 117 53. Clearing and settlement activities of the Central Depository 117 54. Registry activities of the SIBEX Depository 118 55. Clearing and settlement activities of the SIBEX Depository 118 56. Average daily derivatives trading volumes in the period 2008-2012 120 57. Average monthly open positions in the period 2008-2012 121 58. Evolution of futures contracts in 2012 121 59. Evolution in the number of Investors Compensation Fund members 123 60. Evolution of annual contributions by Investors Compensation Fund members 124 61. Evolution of initial contributions by Investors Compensation Fund members 124
List of figures
Figure Page 1. Investment firms by initial share capital and type of business 19 Investment firms by residence of natural and legal person shareholders who hold 2. 20 direct/indirect control positions 3. Asset management companies by line of business 21 4. Number of R.N.S.C. website visitors/views in 2012 54 5. Website visitors from outside the country in 2012 (%) 55 Investment firms from other EU Member States registered with 6. 64 the R.N.S.C. Public Register Credit institutions from other EU Member States registered with 7. 65 the R.N.S.C. Public Register Long-term evolution of main international stock market indexes 8. 69 in the period 2008-2012 (%) 9. Short-term evolution of main international stock market indexes (%) 70 10. Short-term evolution of main B.S.E. indexes (%) 71 11. Medium-term evolution of main B.S.E. indexes (%) 71 12. Evolution of B.S.E. liquidity ratios in the period 2011-2012 72 13. Evolution of RASDAQ indexes in 2012 (%) 72 14. Stock market capitalisation to G.D.P. in the period 2008-2012 73 15. Structure of B.S.E. trading in 2012 75 Evolution of B.S.E. market capitalisation and average daily trading value 16. 76 in the period 2008-2012 (RON m.) 17. Trading in fixed-income instruments in the period 2008-2012 77 18. Evolution in the number of derivatives contracts and transactions in 2012 78 19. Evolution of trading values on the SIBEX regulated spot market in the period 2011-2012 80 20. Evolution of derivatives trading values and volumes in the period 2011-2012 81 21. Number of futures contracts traded in the period 2008-2012 82 22. Number of options traded on SIBEX in the period 2008-2012 83 23. Comparison between BET, BET-FI and DAX Indexes (%) 88 24. Evolution of BET index volatility in 2012 89 25. Evolution of liquidity ratios on the B.S.E.-operated A.T.S. in 2012 91 26. Evolution of RASDAQ liquidity ratios in the period 2008-2012 93 Evolution of RASDAQ market capitalisation and average daily trading values 27. 94 in the period 2008-2012 Evolution in the number of issuers on the B.S.E. regulated market and RASDAQ 28. 95 in the period 2003-2012 29. Distribution of trading values by investment firm in 2012 97 30. Evolution in the number of investors in open-end investment funds 100 31. Evolution of open-end investment fund market shares in 2012 versus 2011 102 32. Number of investors in UCITS and other CIUs/Net asset values of UCITS and CIUs 105 33. Market shares of asset management companies in 2012 (%) 106
iv
34. Evolution in the number of investors in S.I.F. shares in the period 2008-2012 107 35. S.I.F. market capitalisation (RON m.)/S.I.F. closing prices (RON) 108 36. S.I.F. aggregate monthly earnings in 2012 (RON m.) 109 37. Net capital inflows in the period 2008-2012 (RON m.) 112 38. Foreign capital inflows/Foreign capital outflows 113 39. Monthly evolution of open futures positions in the period 2008-2012 119 40. Monthly evolution of open options positions in the period 2008-2012 120 41. Monthly evolution of futures contracts in 2012 122
Abbreviations
A.A.F. = Romanian Asset Managers Association (ro. Asociaţia Administratorilor de Fonduri) A.F.R.B. = Accounting and Financial Reporting Council A.G.M. = Annual General Meeting of shareholders A.N.A.F. = National Agency for Fiscal Administration (ro. Agenţia Naţională de Administrare Fiscală) A.T.S. = Alternative Trading System A.V.A.S. = Authority for State Assets Recovery (ro. Autoritatea pentru Valorificarea Activelor Statului) B.C.H. = Bucharest Clearing House (ro. Casa de Compensare Bucureşti) B.S.E. = Bucharest Stock Exchange BET = Bucharest Exchange Trading Index BET-BK = Bucharest Exchange Trading Benchmark Index BET-C = Bucharest Exchange Trading Composite Index BET-FI = Bucharest Exchange Trading Investment Funds Index BET-NG = Bucharest Exchange Trading Energy & Related Utilities Index BET-XT = Bucharest Exchange Trading Extended Index C.E.B.S. = Committee of European Banking Supervisors CIUs = Collective Investment Undertakings Directorate for Investigating Organised Crime and Terrorism D.I.I.C.O.T = (ro. Direcţia de Investigare a Infracţiunilor de Criminalitate Organizată şi Terorism) D.N.A = National Anticorruption Directorate (ro. Direcţia Naţională Anticorupţie) E.B.A. = European Banking Authority E.G.M. = Extraordinary General Meeting of shareholders E.I.O.P.A. = European Insurance and Occupational Pensions Authority E.S.C. = European Securities Committee E.S.M.A. = European Securities and Markets Authority E.S.R.B. = European Systemic Risk Board EU = European Union F.D.I. = Open-end Investment Fund (ro. Fond deschis de investiţii) F.Î.I. = Closed-end Investment Fund (ro. Fond închis de investiţii) G.D.P. = Gross Domestic Product G.E.O. = Government Emergency Ordinance G.O. = Government Ordinance I.C.F. = Investors Compensation Fund I.F.R.S. = International Financial Reporting Standards I.G.P.R. = General Inspectorate of Romanian Police (ro. Inspectoratul General al Poliţiei Române) I.P.O. = Initial Public Offering I.S.C. = Insurance Supervisory Commission Francophone Institute for Financial Regulation IFREFI = (ro. Institutul Francofon de Reglementare Financiară) IOSCO = International Organization of Securities Commissions ISIN = International Securities Identification Number M.A.I. = Ministry of Administration and Interior (ro. Ministerul Administrației și Internelor) M.E.F. = Ministry of Economy and Finance (ro. Ministerul Economiei şi Finanţelor) MiFID = Directive 2004/39/EC on markets in financial instruments N.B.R. = National Bank of Romania N.C.F.S. = National Committee for Financial Stability
v
O.M.F. = Order of the Minister of Finance National Office for the Prevention and Control of Money Laundering O.N.P.C.S.B. = (ro. Oficiul Naţional de Prevenire şi Combatere a Spălării Banilor) ORDB = Main B.S.E. trading market for bonds ORDR = Main B.S.E. trading markets for rights Prosecutor’s Office attached to the High Court of Justice P.I.C.C.J. = (ro. Parchetul de pe lângă Înalta Curte de Casaţie şi Justiţie) P.P.S.S.C. = Private Pension System Supervisory Commission PO = Public Offering POM = Public Offering Market PPO = Public Purchasing Offer PTB = Public Takeover Bid R.C.H. = Romanian Clearing House R.N.S.C. = Romanian National Securities Commission REGF = Main B.S.E. trading market for futures Main trading market for shares on B.S.E. before the merger with B.E.R. REGS = (RASDAQ Electronic Market) RGBS = Main trading market for shares transferred from the Portal system to B.S.E. S.A.I. = Asset Management Companies (ro. Societăţi de administrare a investiţiilor) S.I.F. = Financial Investment Company (ro. Societate de investiţii financiare) S.R.C. = Securities Registration Certificate S.S.I.F. = Investment firm (ro. Societate de servicii de investiţii financiare) SIBEX = S.C. Sibex - Sibiu Stock Exchange S.A. UCITS = Undertakings for Collective Investment in Transferable Securities UNLS = B.S.E. unlisted securities market XMBS = OTC market
Symbols
BRD = Symbol for BRD - Groupe Societe Generale S.A. DESIF1 = Derivative on the shares of S.I.F. Banat-Crişana (symbol SIF1) DESIF2 = Derivative on the shares of S.I.F. Moldova (symbol SIF2) DESIF3 = Derivative on the shares of S.I.F. Transilvania (symbol SIF3) DESIF4 = Derivative on the shares of S.I.F. Muntenia (symbol SIF4) DESIF5 = Derivative on the shares of S.I.F. Oltenia (symbol SIF5) SIBGOLD = Symbol for gold futures
vi
ANNUAL REPORT
I. ROMANIAN NATIONAL SECURITIES COMMISSION
Romanian National Securities Commission Annual Report – 2012
1. PRESENTATION AND CORE OBJECTIVES The Romanian National Securities Commission ((R.N.S.C.) - ro: Comisia Naţională a Valorilor Mobiliare (C.N.V.M.)) is an independent administrative body operating pursuant to the provisions laid down in Government Emergency Ordinance no. 25/2002, as approved by Law no. 514/2002 as amended and supplemented by Law no. 297/2004 on the capital market, and Law no. 289/2010 amending and supplementing some normative acts. R.N.S.C.’s core objectives are to regulate, supervise and oversee regulated markets in financial instruments, as well as the specific institutions and operations thereof. As of 2012 year-end, R.N.S.C. had the following members: Eugenia Carmen Negoiţă - President1 Alexe Gavrilă - Vice-President Gheorghe Marcu - Vice-President2 Dorina Teodora Mihăilescu - Commissioner Gheorghe Albu - Commissioner3 Ştefania Gabriella Ferencz - Commissioner4 Lóránd István Králik - Commissioner
In 2012, the core objectives pursued by R.N.S.C. were: to promote a fair and transparent market in financial instruments; to promote confidence in markets in financial instruments and investments in financial instruments; to establish and maintain an appropriate framework for the development of markets in financial instruments; to protect regulated entities and investors against unfair, abusive and fraudulent practices; to prevent fraud and market manipulation and to ensure the integrity of markets in financial instruments; to prevent any adverse impact on equal access to information and fair treatment of investors or their interests; to establish standards for financial soundness and honest practices on markets in financial instruments;
1 Ms. Eugenia Carmen Negoiţă’s mandate as President started on 4 October 2012. Until that date, Ms. Gabriela Victoria Anghelache had been the President of the Romanian National Securities Commission. 2 Mr. Gheorghe Marcu’s mandate as Vice-President started on 5 November 2012. Until that date, Ms. Eugenia Carmen Negoiţă had been the Vice-President of the Romanian National Securities Commission. 3 Mr. Gheorghe Albu’s mandate as commissioner started on 2 October 2012. Until that date, Mr. Bogdan Mihai Chetreanu had been a commissioner of the Romanian National Securities Commission. 4 Ms. Ştefania Gabriella Ferencz’s mandate as commissioner started on 4 October 2012. Until that date, Ms. Cătălina Claudia Sava had been a commissioner of the Romanian National Securities Commission.
1
Romanian National Securities Commission Annual Report – 2012
to adopt measures so as to prevent systemic risk on markets in financial instruments; to cooperate with similar relevant authorities from other countries in order to achieve all the objectives above.
The activities pursued by R.N.S.C. were fully funded from extra-budgetary resources, in accordance with the legislation in force. In 2012, R.N.S.C. - as regulatory authority of the Romanian capital market - has continued the transposition of new European legislation into the relevant national legislation, as well as amending sector-specific secondary legislation. The primary legal framework was also subject to critical amendments regarding:
• establish a new maximum quota in the share capital of an investment company which may be acquired in any manner or held by a person, individually or jointly with other persons acting in concert; • transpose into national legislation the provisions of several European Directives concerning undertakings for collective investment in transferable securities and asset management companies, public takeover bids, cumulative voting, annual general meetings of shareholders, and the penalties applicable to capital market; • supplement the term “regulated market” with the inclusion of allowances for greenhouse gas emissions. By supervising markets in financial instruments and identifying market risks, R.N.S.C. has sought to promote systemic stability and fair capital market operations. R.N.S.C. has also focused on the prevention of financial risks arising from insufficient own funds held by the supervised entities considering the risk profile thereof or excessively large exposures to other financial institutions. On-site inspection was given a pro-active role, which involved, besides sanctions for the persons in breach of capital market legislation, also appropriate requirements for the supervised entities to remedy impairments and follow-up the actions imposed. As the authority regulating the capital market, R.N.S.C. has also participated in the activities conducted by the Council of the European Union, the European Securities and Markets Authority (E.S.M.A.), the International Organization of Securities Commissions (IOSCO) and the European Systemic Risk Board (E.S.R.B.), providing technical expertise through its representatives present at the meetings of the aforementioned organisations.
2
Romanian National Securities Commission Annual Report – 2012
2. ROMANIA’S CAPITAL MARKET Mirroring the latest developments in Eurozone capital markets, where stock market indexes recorded greatly improved closing values, Romania’s stock markets and indexes showed significant growth rates in 2012. Risk aversion towards investments on the capital market has eased down, while risk tolerance continued to consolidate. Consequently, quotations for most financial instruments went up, the same as foreign capital inflows, whose high volumes showed significant foreign investor’s interest in the financial instruments available on the domestic capital market. Net foreign capital inflows in 2012 exceeded the figure reported in 2011. By the end of 2012, B.S.E. indexes showed significantly improved closing values by comparison with the previous year; thus: BET index went up by 18.67%, BET-FI index by 31.19%, BET-C composite index by 6.28%, while ROTX index went up by 29.09%. BET-XT and BET-NG closing prices were also much higher, i.e. 19.22% and 2.61%, respectively. The number of bond transactions rose by 64.91% year-on-year, similar to the figure reported in 2010, while bond trading volume decelerated by 86.79%. The number of bond issuers increased from 60 to 68, while trading volumes were also approximately 162% higher compared with the previous year. The number of investors in open-end investment funds was higher both in respect of retail and institutional investors, thus continuing on the same trend as in the past five years. The net asset value of closed-end investment funds was higher in 2012, due to increased investor interest in the category of bond funds. As a regulator of the Romanian capital market, R.N.S.C. has promoted the improvement of the relevant legal framework with a view to ensure enhanced investor protection against unfair market practices, better supervisory disclosure, equal access to information and fair investor treatment. During 2012, the primary legal framework of the Romanian capital market was amended by adopting Law no. 11/2012 amending Law no. 297/2004 on the capital market, Government Emergency Ordinance no. 32/2012 on undertakings for collective investment in transferable securities and asset management companies, amending and supplementing Law no. 297/2004 on the capital market and Law no. 167/2012 amending Law no. 297/2004 on the capital market. R.N.S.C. has worked in cooperation with the Ministry of Public Finance for the preparation of the Draft Government Emergency Ordinance amending and supplementing Law no. 137/2002 concerning some measures to accelerate privatisation, as amended and supplemented, as well as for the preparation of the Draft Law amending and supplementing Law no. 32/2006 on mortgage covered bonds. R.N.S.C. has also continued to transpose the European regulations by adjusting them to the current status of the Romanian capital market, while also improving sector- specific secondary legislation with a view to setting-up a legal framework which is appropriate for the conditions which may occur on the capital market as a result of the extended international financial crisis. 3
Romanian National Securities Commission Annual Report – 2012
At European level, the R.N.S.C. representatives have actively participated in the meetings of the Council of the European Union aimed for adopting decisions on the development and amendment of European Directives and regulations which are relevant for the capital market. The 2012 agenda of European entities’ representatives included topics such as the replacement in 2012 of the Directive on Markets in Financial Instruments (MiFID) and the Market Abuse Directive (MAD) with new Directives and regulations, an objective which involved a thorough review of issues concerning market abuse, as well as transparency requirements for issuers, brokers and markets in financial instruments. Discussion topics also referred to prudential requirements for investment firms and credit institutions, credit rating agencies, social entrepreneurship funds and venture capital funds. Discussions also focused on the introduction of new definitions and concepts, such as “organized trading facility” (OTF) and “high frequency trading” (HFT), as well as on establishing requirements applicable to investment firms which use trading algorithms, so that to allow authorities to supervise such trading. R.N.S.C. has continued its involvement in all the activities conducted by the International Organization of Securities Commissions (IOSCO), particularly in the activities of IOSCO’s Emerging Markets Committee and the various working groups thereof. R.N.S.C. has also attended the meetings of the European Systemic Risk Board (ESRB) and the European Securities Committee (ESC), where discussions focused on the systemic risks which may have a negative impact on the stability of European financial markets. As a conclusion, the activities pursued by R.N.S.C. in 2012 were mainly aimed at ensuring stability of the financial sector by adopting and implementing fair market practices, as well as by ensuring investor protection. All these actions have pro-actively contributed to the consolidation of the domestic capital market and the improvement of the investment climate on the financial markets in Romania.
4
Romanian National Securities Commission Annual Report – 2012
3. ACTIVITY
3.1. REGULATION In 2012, R.N.S.C.’s regulatory activity mainly relied on measuring the impact of the recently adopted normative acts, focusing on the dialogue with capital market entities with the purpose of adjusting regulations to the conditions of the Romanian capital market.
3.1.1. Regulations issued by R.N.S.C. The regulations issued by R.N.S.C. in 2012 were aimed for amending and supplementing the secondary legislation in the context of the newly-issued European capital market legislation, with the prior information of the entities regulated by R.N.S.C. The transposition of the new European capital market legislation was conducted simultaneously with the improvement of sector-specific secondary legislation, namely the preparation of norms supplementing the normative acts implemented at national level, as well as the establishment of a legal framework required by the new context and initiatives on the capital market. In 2012, the primary legal framework applicable to the Romanian capital market was amended by three normative acts, as follows: • Law no. 11/2012 amending Law no. 297/2004 on the capital market; • Government Emergency Ordinance (G.E.O.) no. 32/2012 on undertakings for collective investment in transferable securities and asset management companies, amending and supplementing Law no. 297/2004 on the capital market; • Law no. 167/2012 amending Law no. 297/2004 on the capital market. Law no. 11/2012 establishes to 5% the threshold for the maximum holding of share capital in an investment firm which may be acquired in any manner or held by a person, individually or jointly with persons acting in concert. The previous threshold was set at 1% pursuant to the provisions laid down in Government Ordinance (G.O.) no. 41/2005, as approved by Law no. 97/2006. Government Emergency Ordinance no. 32/2012 regulates capital-market specific provisions and has the following structure: Title I - Undertakings for collective investment in transferable securities and asset management companies - is a national transposition of the provisions laid down in: Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities; Commission Directive 2010/43/EU implementing Directive 2009/65/EC as regards organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depository and a management company; and 5
Romanian National Securities Commission Annual Report – 2012
Commission Directive 2010/44/EU implementing Directive 2009/65/EC as regards certain provisions concerning fund mergers, master-feeder structures and the notification procedure. Title II - Amending and Supplementing Law no. 297/2004 on the capital market, including the transposition of some provisions concerning public takeover bids, cumulative voting, annual general meetings of shareholders and sanctions set out in the following European Directives: Directive 2004/25/EC of the European Parliament and of the Council on takeover bids; Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/CE of the European Parliament and of the Council and repealing Council Directive 93/22/EEC; Directive 2007/36/EC of the European Parliament and of the Council on the exercise of certain rights of shareholders in listed companies; Directive 2007/44/EC of the European Parliament and of the Council amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC and 2005/68/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector; Directive 2010/73/EU of the European Parliament and of the Council amending Directives 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market; Directive 2010/78/EU of the European Parliament and of the Council amending Directives 98/26/EC, 2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC and 2009/65/EC in respect of the powers of the European Supervisory Authority (European Banking Authority), the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority).
Law no. 167/2012 amends the definition of “regulated markets” by including greenhouse gas emission allowances, which will result in a more diversified range of products for investors and disposes for “expanding the core business of investment firms” so that to allow participation of such investment firms in tenders, where investment firms may bid directly or indirectly, on behalf of their clients, for instruments other than financial instruments, thus contributing to increased business volumes, number of clients and assets in the portfolio thereof.
6
Romanian National Securities Commission Annual Report – 2012
In 2012, other normative acts relevant for the capital market came into force and resulted in amending or supplementing secondary legislation. Some of the normative acts were: Law no. 18/2012 approving Government Emergency Ordinance no. 49/2011, amending and supplementing Law no. 571/2003 regarding the Fiscal Code and other financial and fiscal provisions; Law no. 32/2012 approving Government Emergency Ordinance no. 37/2011, amending and supplementing Law no. 82/1991 and amending other relevant normative acts; Law no. 60/2012 approving Government Emergency Ordinance no. 79/2011 regulating some measures required for the entry into force of Law no. 287/2009 regarding the Civil Code; Law no. 63/2012 amending and supplementing Romania’s Penal Code and Law no. 286/2009 regarding the Penal Code; Law no. 76/2012 implementing Law no. 134/2010 regarding the Civil Procedure Code; Law no. 77/2012 amending and supplementing Law no. 36/1995 concerning public notaries and notary activities; Government Ordinance no. 2/2012 amending and supplementing Government Ordinance no. 92/2003 regarding the Fiscal Procedure Code; Government Emergency Ordinance no. 2/2012 amending and supplementing Law no. 31/1990 on companies; Government Emergency Ordinance no. 24/2012 amending and supplementing Law no. 571/2003 regarding the Fiscal Code and regulating some financial and fiscal measures; Government Emergency Ordinance no. 36/2011 concerning some reorganisation measures and amending Law no. 202/1998 on the organisational structure of the Official Gazette of Romania; Government Emergency Ordinance no. 39/2012 regarding the transfer of some buildings to state property; Government Decision no. 38/2012 approving the strategy for the privatisation of Societatea Comercială de Producere a Energiei Electrice în Hidrocentrale „Hidroelectrica” - S.A. Bucureşti; Government Decision no. 39/2012 approving the strategy for the privatisation of Societatea Naţională „Nuclearelectrica” - S.A. Bucureşti; Government Decision no. 50/2012 amending and supplementing the Methodological Norms approving Law no. 571/2003 on the Fiscal Code, as approved by Government Decision no. 44/2004; Government Decision no. 139/2012 concerning the amendment of art. 3 of Government Decision no. 826/2010 approving the strategy for the sale
7
Romanian National Securities Commission Annual Report – 2012
through capital market specific mechanisms of shares issued by Compania Naţională de Transport al Energiei Electrice „Transelectrica” - S.A.; Government Decision no. 252/2012 approving the strategy for the privatisation through capital market specific mechanisms of the power distribution branches “Electrica Distribuţie Transilvania Sud” - S.A., “Electrica Distribuţie Transilvania Nord” - S.A. and “Electrica Distribuţie Muntenia Nord” - S.A.; Government Decision no. 353/2012 approving the Internal Regulations of the National Association of Certified Valuators; Order no. 591/2012 of the Government Secretariat General concerning the publication, recast and correction, as well as the limited edition publication of acts in the Official Gazette of Romania; Decision no. 83/2012 of the Prime Minister amending the annex to Decision no. 129/2011 of the Prime Minister concerning the establishment of the Inter-Ministerial Committee for the supervision of the management of emission allowance trading; Order no. 74/2012 of the Minister of Public Finance regulating some issues concerning tax residence in Romania for natural persons; Order no. 881/2012 of the Minister of Public Finance concerning the implementation of International Financial Reporting Standards by companies whose securities are admitted to trading on a regulated market; Decision no. 2/2012 of the Romanian Chamber of Commerce and Industry approving the Internal Regulations of the International Court of Arbitration of the Romanian Chamber of Commerce and Industry; Resolution no. 17/2012 of the Romanian Chamber of Commerce and Industry approving the Arbitration Rules of the International Court of Arbitration; Decision no. 1/2012 of the National Association of Certified Valuators approving the Code of conduct for certified valuators; Decision no. 2/2012 of the National Association of Certified Valuators approving the Regulation of the Professional Conduct Commission; Decision no. 3/2012 of the National Association of Certified Valuators approving the mandatory valuation standards for the members of the National Association of Certified Valuators; Decision no. 4/2012 of the National Association of Certified Valuators approving the establishment and operation of the branches of the National Association of Certified Valuators; Decision no. 5/2012 of the National Association of Certified Valuators approving the establishment of some branches of the National Association of Certified Valuators. In 2012, the regulatory activity conducted by R.N.S.C. resulted in the preparation of eight regulations, as shown in Table 1 below.
8
Romanian National Securities Commission Annual Report – 2012
Regulations issued by R.N.S.C. Table 1 Regulation Explanation/Content Regulation no. 2/2012 amending The amendment of Regulation no. 7/2006 Regulation no. 7/2006 recast on the revenues of R.N.S.C. by reducing on the revenues of R.N.S.C. some charges and taxes levied on the entities authorised, regulated and/or supervised by the capital market authority with respect to: - trading on regulated markets and/or within alternative trading systems by brokers acting as market makers for a certain financial instrument - from 0.08% to 0.04%; - trading in ETFs on regulated markets and/or within alternative trading systems - from 0.08% to zero (0%); - trading in financial instruments on regulated markets or within alternative trading systems by brokers who act as market makers for a certain derivative - from 0.08 RON/contract to 0.04 RON/contract; - in the case of public offerings of shares held by a public institution on behalf of the Romanian state - from 0.5% (generally) to 0.35% (in this particular instance). Regulation no. 4/2012 implementing In its capacity of competent authority with the provisions laid down in art. 36 regard to credit rating agencies, and within of Law no. 297/2004 on the capital the meaning of Regulation (EC) market, as amended and no. 1060/2009, R.N.S.C. shall exercise its supplemented, as well as some powers and take the necessary measures set provisions laid down in Regulation out in the Regulation, in accordance with the (EC) no. 1060/2009 of the European provisions laid down in the R.N.S.C. Statute. Parliament and of the Council For the purposes of art. 36 of Law on credit rating agencies, as amended no. 297/2004, regulated markets and alternative and supplemented trading systems in Romania shall recognise the assessment and rating established by credit rating agencies registered in the EU in accordance with the provisions set out in (EC) Regulation no. 1060/2009. Regulation no. 5/2012 amending Amendments are aimed at facilitating access and supplementing Regulation to and enhancing participation of market no. 12/2010 on the certification operators and experts authorised by R.N.S.C. of training bodies, market operators in ongoing professional training programmes. and experts on the capital market Regulation no. 6/03.09.2012 This Regulation provides for the designation implementing the provisions laid of R.N.S.C. as competent authority within
9
Romanian National Securities Commission Annual Report – 2012
Regulation Explanation/Content down in art. 41 of Regulation (EU) the meaning of Regulation (EU) no. 236/2012 no. 236/2012 on short selling and in charge of supervising the implementation certain aspects of credit default swaps of the provisions laid down therein with regard to shares admitted to trading on trading venues in Romania, plus some administrative measures and sanctions for the purposes of art. 41 of Regulation (EU) no. 236/2012 on short selling and certain aspects of credit default swaps. Regulation no. 9/2012 amending Further details concerning participation and supplementing Regulation of market operators and experts authorised no. 12/2010 on the professional training by R.N.S.C. in ongoing professional training of market operators and experts programmes. Regulation no. 10/2012 amending and The amendment of some regulations issued supplementing some R.N.S.C. by R.N.S.C. with the aim of implementing regulations some provisions of Directive 2010/73/EU amending Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, as well as of Directive 2007/36/EC on the exercise of certain rights of shareholders in listed companies. Regulation no. 11/2012 amending This Regulation is amending the valuation Regulation no. 4/2010 on registration methods used with regard to certain asset with R.N.S.C. and operation categories where Fondul Proprietatea may of Societatea Comercială „Fondul invest and sets out further details concerning Proprietatea” - S.A., and the trading of the requirement to comply with the shares thereof the “Investment policy of Fondul Proprietatea”, in accordance with the investment limits set out in Law no. 247/2005 on reform in the justice and ownership systems, and some additional measures, as amended and supplemented. Regulation no. 12/2012 implementing This Regulation sets out the conditions the provisions laid down in art. 6 which investment firms (S.S.I.F.)/credit sub-paragraph a) of Government institutions should meet in order to Emergency Ordinance no. 115/2011 participate in the auctioning of greenhouse on establishing the institutional gas emission allowances on behalf of their framework and authorising clients, in accordance with the provisions the Government through the Ministry set out in art. 18 para. (3) of Regulation (EU) of Public Finance to auction the no. 1031/2010. greenhouse gas emission allowances
10
Romanian National Securities Commission Annual Report – 2012
Regulation Explanation/Content assigned to Romania at EU level and art. 18 para. (3) of Commission Regulation (EU) no. 1031/2010 of 12 November on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowances trading within the Community
Source: R.N.S.C.
In 2012, R.N.S.C. has also issued seven instructions, as shown in Table 2 below.
Instructions issued by R.N.S.C. Table 2 Instruction Explanation/Content Instruction no. 1/2012 concerning This Instruction regulates the manner money market funds in which a collective investment undertaking may be considered a money market fund. Instruction no. 2/2012 amending Amendments to the forms required Instruction no. 2/2007 concerning for the preparation and submission of annual the preparation and submission financial statements, in accordance with of annual financial statements the new relevant provisions of R.N.S.C. by the entities authorised, regulated Regulation no. 4/2011. and supervised by R.N.S.C. Instruction no. 3/2012 amending Amendments to the previous provisions Instruction no. 5/2006 concerning concerning the half-yearly accounting the half-yearly accounting reporting reporting system of the entities authorised, system of the entities authorised, regulated and supervised by R.N.S.C. regulated and supervised by R.N.S.C. as regards the content of the “General data” form, and amendments to certain data correlations. Instruction no. 5/2012 concerning the Details regarding the format and content of format, content and presentation of the the Key Investor Information Document key investor information document (KIID) referred to in Regulation (EU) by undertakings for collective no. 583/2010, which replaces the simplified investment in transferable securities prospectus of undertakings for collective investment in transferable securities (UCITS). Instruction no. 6/2012 issued for This Instruction repeals R.N.S.C. Instruction the implementation of the provisions no. 1/2007 issued for the implementation of laid down in art. 286^1 of Law the provisions laid down in art. 286^1 of Law no. 297/2004 on the capital market no. 297/2004 on the capital market,
11
Romanian National Securities Commission Annual Report – 2012
Instruction Explanation/Content as amended and supplemented by Law no. 208/2005 and Law no. 97/2006 and sets out a new procedure regarding the assessment and acknowledgement by R.N.S.C. of the applicability of the provisions laid down in art. 286^1 of Law no. 297/2004, also considering the entry into force of Law no. 11/2012 amending Law no. 297/2004 on the capital market. Instruction no. 7/2012 concerning This Instruction sets out the requirement the submission of reports regarding for investment firms and credit institutions client complaints and the status thereof in Romania which are registered with the R.N.S.C. Public Register, investment advisors, asset management companies authorised to perform the activities referred to in art. 5 para. (3) sub-paragraph a) and b) indent (i) of Government Emergency Ordinance no. 32/2012, asset management companies which conduct marketing and distribution services, the branches of brokers from other EU Member States which are registered with the R.N.S.C. Public Register, as well as branches of brokers for non-member countries to submit half-yearly reports concerning client complaints and the status thereof. Instruction no. 8/2012 concerning This Instruction sets out some norms aimed the implementation of guidelines at the implementation of the guidelines relating to certain aspects of MiFID established by E.S.M.A. in relation to certain requirements regarding suitability aspects of MiFID requirements regarding suitability issued by the European Securities and Markets Authority (ESMA) and of art. 130 and 133 and other related articles of R.N.S.C. Regulation no. 32/2006 on investment services, as amended and supplemented.
Source: R.N.S.C.
The normative acts prepared by R.N.S.C. were published in advance in a draft version on the institution’s website, so as to allow stakeholders to review them and submit their comments and proposals for amendments and supplementations in due time, with the purpose of improving the legal framework for market participants. The opinions expressed during the consultation process were carefully examined by R.N.S.C. and some of the proposed amendments were adopted in the final version of the same normative acts, when appropriate.
12
Romanian National Securities Commission Annual Report – 2012
In 2012, R.N.S.C. issued 27 decisions on measures to resolve specific issues such as:
- the establishment of a requirement for market operators to have a compliance department;
- the 12-month extension period for the asset management companies/self-managed investment companies to offer shares to the public;
- the identification of the conditions which should be met for securing underwritings at public offerings, provided that the broker - who is a participant to the trading system and the relevant clearing and settlement system - may place an order in the trading system on behalf of the client;
- the amendment of requirements concerning the date when securities may be offered to the public;
- the establishment of the documents which an issuer may request in order to identify and prove the shareholder position of a person who makes inquiries or proposals to add topics on the agenda of the annual general meeting of shareholders, in accordance with the provisions laid down in R.N.S.C. Regulation no. 6/2009;
- the adjournment of the provisions laid down in R.N.S.C. Regulation no. 2/2006 on regulated markets and alternative trading systems concerning securities trading within an alternative trading system without the consent of the issuer;
- the 90-day extension period for Instruction no. 6/2011 on the implementation of International Financial Reporting Standards by the entities authorised, regulated and supervised by R.N.S.C. for the 2011 annual financial statements prepared for information purposes;
- the deletion of the registration number of an entity registered with the R.N.S.C. Public Register whose authorisation/approval/endorsement/validation is withdrawn; the relevant registration number will no longer be assigned to another entity;
- the opportunity for the Central Depository to outsource settlement within the framework of the TARGET2-Securities project developed by Eurosystem, and the establishment of certain requirements which the Central Depository should meet when outsourcing settlement;
- the suspension of the provisions laid down in R.N.S.C. Regulation no. 2/2006 on regulated markets and alternative trading systems concerning trading or investments in financial instruments by the entities authorised by R.N.S.C.;
- the establishment of a provision concerning the involvement of undertakings for collective investment in transferable securities in securities lending;
13
Romanian National Securities Commission Annual Report – 2012
- the further explanation of aspects concerning the operations which may be conducted by Exchange-Traded Funds (ETFs);
- the extension until 31.03.2013 of the suspension of the requirement for auditing the IT systems of the entities authorised, regulated and supervised by R.N.S.C., as well as of the suspension of the measures whereby brokers may provide clients with direct electronic access to a regulated market/alternative trading system;
- the establishment of the quota charged by R.N.S.C. on trading outside a regulated market or an alternative trading system (i.e. Over-the-Counter trading), in the case of turnaround transactions: for OTC sale of securities by the persons who have purchased the said securities subject to public offering, the charge is zero (0%), while for the OTC sales other than the aforementioned, the charge is 0.04% of the trading value reported to S.C. Depozitarul Central S.A.;
- the establishment of a derogation whereby the professional training bodies certified by R.N.S.C. which organise ongoing training courses/programmes and are funded from European funds or other grants should not pay the taxes owed to R.N.S.C. for providing professional training programmes;
- the introduction of some provisions concerning the exercise of certain rights by securities issuers; - the harmonisation of national norms with the provisions laid down in Regulation (EU) no. 236/2012 on short selling and certain aspects of credit default swaps and the EU regulations issued for the implementation thereof; - the establishment of some measures whose purpose is the setting-up of a single/harmonised framework for the valuation of the assets held by the CIUs authorised by R.N.S.C.; - the establishment of a requirement to submit to R.N.S.C. the reports concerning client complaints and the status thereof for the period 01.07.2011-30.06.2012; - the establishment/revision of some charges/taxes levied on capital market operations; - the introduction of some measures concerning the registration and deletion of any foreclosure/attachment of securities registered with the Central Depository system; - the establishment of some transitional measures for the implementation of Government Emergency Ordinance no. 32/2012 on undertakings for collective investment in transferable securities, amending and supplementing Law no. 297/2004 on the capital market; - the suspension of the provisions laid down in R.N.S.C. Regulation no. 32/2006 on investment services, as amended and supplemented, concerning natural person investment agents and tied agents; - the establishment (maintenance) of charges and taxes levied on capital market operations for the financial year 2013; - the suspension of some taxes referred to in the annex to R.N.S.C. Regulation no. 7/2006 on the revenues of R.N.S.C., as amended and supplemented, namely the taxes referred to under indent 5.1.16, 5.1.22 and 5.1.23;
14
Romanian National Securities Commission Annual Report – 2012
- the establishment of a requirement for central depositories and clearing houses/central counterparties to have a compliance department in charge of supervising compliance by the company and the employees thereof with the legislation in force relevant for the capital market and with the relevant internal rules, in order to mitigate any default risk. The provisions laid down in some of the decisions on measures above will be included in the revised versions of the corresponding regulations.
In response to some requests, R.N.S.C. expressed in 2012 opinions and interpretations with regard to the implementation of capital market legislation in various concrete situations; consequently, R.N.S.C. issued approvals and decisions as official responses to inquiries concerning the implementation of primary or secondary legislation, among which there should be mentioned:
- providing explanations regarding the implementation of the provisions concerning the notion of ”stock option plan”, and the purchasing of shares of an issuer incorporated in another EU Member State, whose shares are admitted to trading on a regulated market in that EU Member State;
- providing the conditions under which a market/system operator may publish issuer reports, and request issuers to provide certificates of incumbency issued by the Trade Register as evidence for a person’s capacity of being authorised/legal representative of a certain issuer;
- the expansion as of 01.02.2012 of the scope of the omnibus account system and of the mechanism without securities pre-validation for securities admitted to trading on the regulated spot market operated by S.C. Bursa de Valori Bucureşti S.A.;
- the expansion as of 11.06.2012 of the scope of the omnibus account system and of the mechanism without securities pre-validation for securities traded within the alternative trading system (A.T.S.) operated by S.C. Bursa de Valori Bucureşti S.A.;
- providing an interpretation for the provisions laid down in art. 90 para. (1) of Regulation no. 32/2006 on investment services, as amended and supplemented; - the expansion as of 14.01.2013 of the scope of the omnibus account system and the mechanism without securities pre-validation for all the securities registered with the RoClear system operated by S.C. Depozitarul Central S.A. R.N.S.C. has also issued a certificate of informal consent concerning the outsourcing of settlement by S.C. Depozitarul Central S.A. within the framework of the TARGET2- Securities project developed by Eurosystem, including a number of requirements that S.C. Depozitarul Central S.A. should meet in the context.
By means of all the regulations above, R.N.S.C. has continued its pursuit of harmonising Romanian secondary legislation with European legislation in the securities market, a process which considers the opinions and recommendations of the regulated entities on the Romanian capital market and the professional associations thereof. 15
Romanian National Securities Commission Annual Report – 2012
3.1.2. Regulations issued by capital market institutions and approved by R.N.S.C. Throughout the year 2012, R.N.S.C. has reviewed and subsequently approved, at the request of some capital market institutions, supplementations and amendments to the regulations and procedures issued by the latter. The regulations issued by capital market institutions and approved by R.N.S.C. in 2012 are shown in Table 3 below.
Amendments to regulations issued by capital market institutions and approved by R.N.S.C. Table 3 Institution Regulations Bucharest Stock Exchange Amendments to the Bucharest Stock Exchange (ro: S.C. Bursa de Valori Bucureşti S.A.) Code - Title I - Regulated spot market - as regards: - the minimum content of trading orders; - ETFs; - the minimum value of deal orders; - structured products; - suspension from trading; - public offerings; - error correction. Bucharest Stock Exchange Amendments to the Bucharest Stock Exchange (ro: S.C. Bursa de Valori Bucureşti S.A.) Code - Title I - Regulated spot market - as regards trading of shares from non-member countries. S.C. Sibex - Sibiu Stock Exchange S.A. Amendments to the Internal Regulations of S.C. Sibex - Sibiu Stock Exchange S.A. as regards the structure and duties of various departments. S.C. Sibex - Sibiu Stock Exchange S.A. Amendments to Regulation no. 6 of S.C. Sibex - Sibiu Stock Exchange S.A. on the organisational structure, operations and trading within the regulated spot market operated by S.C. Sibex - Sibiu Stock Exchange S.A. with regard to the expansion of the range of securities which may be subject to trading (structured products, Exchange Traded Funds, mortgage covered bonds and other debt securities). The scope of the “special sale to order” was also revised by including references to designated enforcers and foreclosured. S.C. Sibex - Sibiu Stock Exchange S.A. Regulation no. 7 on the organisational structure, operations and trading within the alternative trading system operated by S.C. Sibex - Sibiu Stock Exchange S.A. Amendments regarding the possibility to trade in several securities categories (shares and units of CIUs, securities also admitted to trading on a regulated market, traded but not listed
16
Romanian National Securities Commission Annual Report – 2012
Institution Regulations within an alternative trading system, debt securities, including mortgage covered bonds, structured products, Exchange Traded Funds); regulating market makers within an alternative trading system. Central Depository Amendments to the Central Depository Code (ro. S.C. Depozitarul Central S.A.) as regards the introduction of some provisions concerning the possibility for S.C. Depozitarul Central S.A. to settle turnaround transactions. Investors Compensation Fund Procedure no. 1 concerning Fund members, (ro. S.C. Fondul de Compensare the determination, reporting and payment a Investitorilor S.A.) of contributions (the amendment refers to the calculation of the contribution to be paid for 2012). S.C. Sibex - Sibiu Stock Exchange S.A. The Internal Regulations of S.C. Sibex S.A. - a consolidated version of SIBEX Regulations no. 1 and no. 2
Source: R.N.S.C.
3.1.3. Draft legislation issued by other authorities and reviewed by R.N.S.C. In 2012, R.N.S.C. has contributed to the preparation of some normative acts relevant to the financial sector together with other authorities and institutions in the field. R.N.S.C.’s review of the draft legislation prepared by other authorities facilitated the establishment of a coherent national legal framework in the financial and banking area. The draft legislation issued by other authorities and reviewed by R.N.S.C. is shown in Table 4 below. Draft legislation issued by other authorities and reviewed by R.N.S.C.
Table 4 Authority Draft legislation reviewed Ministry of Economy, Commerce Draft Government Emergency Ordinance and Business Environment amending and supplementing Law no. 137/2002 regarding some measures to accelerate privatisation, as amended and supplemented Ministry of Public Finance Draft Law amending and supplementing Law no. 32/2006 on mortgage covered bonds Private Pension System Supervisory Draft Norm amending P.P.S.S.C. Commission (P.P.S.S.C.) Norm no. 11/2011 concerning the investment and valuation of the assets of private pension funds National Office for the Prevention Draft amendment to Government Decision and Control of Money Laundering no. 594/2008 approving the Regulation (ro. O.N.P.C.S.B.) implementing the provisions laid down in Law no. 656/2002 on the prevention and sanctioning of money laundering and the enforcement of some measures to prevent and control terrorist financing
Source: R.N.S.C. 17
Romanian National Securities Commission Annual Report – 2012
3.2. AUTHORISATION
R.N.S.C.’s authorisation activity revolves around two main directions, namely: the authorisation and registration with the R.N.S.C. Public Register of regulated entities, and the authorisation and approval of market operations, respectively. In 2012 R.N.S.C. was notified of the intention of a new asset management company to be registered with R.N.S.C.; by the end of the year, the asset management company’s request for registration was under review. A new alternative trading system (A.T.S.), i.e. BEST-X, a system operated by S.S.I.F. MUNTENIA GLOBAL INVEST S.A. as system operator was registered with the R.N.S.C. Public Register, but no trading activity was reported by the end of 2012.
In 2012, R.N.S.C.’s authorisation activity focused on compliance by regulated entities with the mandatory requirements set out in the Romanian capital market legislation. 3.2.1. Authorisation and registration of regulated entities with the R.N.S.C. Public Register The Romanian capital market institutions regulated by R.N.S.C. are subject to authorisation and supervision in accordance with the provisions laid down in Law no. 297/2004 on the capital market, as amended and supplemented, and G.E.O. no. 32/2012 on undertakings for collective investment in transferable securities and asset management companies. I. Brokers Brokers, investment firms and credit institutions provide core investment services and ancillary services pursuant to the provisions laid down in art. 5 para. (1) and para. (11) of Law no. 297/2004 on the capital market, as amended and supplemented. Investment firms (ro. S.S.I.F.) In the year 2012, R.N.S.C. has authorised a number of amendments to the organisational structure and operations conducted by investment firms, namely changes to Board memberships or management, changes to shareholder structure, expanding or limiting the scope of business, increases and decreases of share capital; R.N.S.C. has also authorised the establishment or closing down of branches, changes of registered office and changes in the name of some brokers (EFG EUROBANK SECURITIES S.A. has changed its name to EUROBANK SECURITIES S.A.). In the course of 2012, there was no request for the authorisation of a new investment firm, as the market continued to contract as regards the number of brokers which provide investment services on the Romanian capital market. While at the end of the previous year R.N.S.C.’s Public Register listed 52 investment firms, throughout the year 2012, R.N.S.C. has withdrawn and deleted from the Public Register the authorisations of six investment firms: DELTA VALORI MOBILIARE S.A., EGNATIA SECURITIES S.A., STK TRADING S.A., CITY INVEST S.A., W.B.S. ROMANIA S.A. and VALAHIA CAPITAL S.A.; two of the authorisations (CITY INVEST S.A. and VALAHIA CAPITAL S.A.) were withdrawn due to their failure in complying with the legal framework in force by issuing Sanctioning Ordinance.
18
Romanian National Securities Commission Annual Report – 2012
Consequently, by the end of 2012, 46 investment firms were authorised to conduct business on the Romanian capital market, a figure which supports the downward trend started in 2011.
As regards the residence of the natural and legal persons who hold direct or indirect control positions within the shareholder structure of the six investment firms whose authorisations have been withdrawn (i.e. DELTA VALORI MOBILIARE (DVM) S.A., EGNATIA SECURITIES S.A., VALAHIA CAPITAL S.A., STK TRADING S.A., CITY INVEST S.A. and W.B.S. ROMANIA S.A.), the majority of investment firms were controlled by Romanian natural and legal persons. There should be noted that, throughout 2012, five investment firms (i.e. ACTIVE INTERNATIONAL S.A., EUROBANK SECURITIES S.A., INVEST TRUST S.A., UNICAPITAL S.A., UNICREDIT CAIB SECURITIES ROMANIA S.A.) notified R.N.S.C. of their intention to request withdrawal of authorisation; by the end of 2012, the corresponding files were under review. As far as S.S.I.F. GM INVEST S.A. is concerned, the sanction concerning the suspension of the voting right for the majority shareholder was valid throughout the year. As regards the services provided by investment firms, R.N.S.C. has approved the expansion of the scope of business for two investment firms registered with the R.N.S.C. Public Register, as well as the limitation of the scope of business for three investment firms. Consequently, as of 31.12.2012, of the 46 investment firms authorised by R.N.S.C. 29 investment firms provided all the investment services referred to in the law and had an initial share capital of least the RON equivalent of EUR 730,000, while 17 investment firms did not provide services such as trading in financial instruments on own account or underwriting on a firm commitment basis.
Figure 1 shows investment firms as of 31.12.2012 by initial share capital and line of business.
Investment firms by initial share capital and type of business
Source: R.N.S.C. Figure 1
In 2012, R.N.S.C. has also approved some changes in shareholder structures, as a result of acquiring or disposing of direct/indirect significant holdings by Romanian and foreign natural and legal persons.
19
Romanian National Securities Commission Annual Report – 2012
By end-2012, out of the 46 investment firms registered with the R.N.S.C. Public Register, 36 were controlled by Romanian natural and legal persons and 10 such investment firms were controlled by foreign natural and legal persons, of which four from Greece, two from Italy, two from Austria, one from U.S.A. and one from the Republic of Moldova. Figure 2 below shows investment firms by residence of the natural or legal person shareholders who hold direct/indirect control positions. Investment firms by residence of natural and legal person shareholders who hold direct/indirect control positions
Source: R.N.S.C. Figure 2 In 2012, R.N.S.C. approved upon request the intention of S.S.I.F. TRANSILVANIA CAPITAL S.A. to provide core investment services and ancillary services within the territory of other EU Member States by the principle of the freedom to provide services; the states targeted were Austria and Germany. Table 5 below shows the investment firms which notified their intention to provide investment services in other EU Member States in the period 2008-2012. Investment firms which notified their intention to provide investment services in other EU Member States Table 5 No. Investment firm EU Member State Year of notification Austria 2008 1. BT Securities S.A. Poland 2011 2. Estinvest S.A. Austria 2008 Austria 2008 3. Muntenia Global Invest S.A. Great Britain 2009 Austria 4. IFB Finwest S.A. 2009 Germany The Netherlands 5. Vienna Investment Trust S.A. France 2010 Austria 6. Broker S.A. Austria 2010 7. Tradeville S.A. Bulgaria 2010 Sweden 2011 8. Eldainvest S.A. Great Britain 2011 Austria 2012 9. Transilvania Capital S.A. Germany 2012 10. Carpatica Invest S.A. Poland 2011
Source: R.N.S.C.
20
Romanian National Securities Commission Annual Report – 2012
Annex 1 shows the investment firms authorised and registered with the R.N.S.C. Public Register as of 31.12.2012.
Credit institutions
As of 31.12.2012, there were 12 Romanian legal person credit institutions acting as brokers on the Romanian capital market. By the end of 2012, seven such credit institutions (i.e. Banca Comercială Română S.A., B.R.D. Groupe Societe Generale S.A., OTP Bank România S.A., Piraeus Bank România S.A., R.B.S. Bank (România) S.A., Bancpost S.A. and Credit Europe Bank România S.A.) were also participants to the regulated market authorised by R.N.S.C., and six provided mainly securities custody services.
Annex 2 shows the credit institutions registered as brokers with the R.N.S.C. Public Register as of 31.12.2012.
II. Asset management companies (ro. S.A.I.)
During 2012, R.N.S.C. received the requests of some asset management companies as regards amendments to the organisational structure and operations conducted, mainly changes of registered office, share capital decreases, changes in the membership of the Board or management, amendments to Internal Regulations, changes in the shareholder structure and changes of company names. R.N.S.C. has approved the change in the name of S.A.I. Zepter S.A. to Zepter Asset Management - Societate de Administrare a Investiţiilor S.A.
There were no requests for authorisation withdrawal filed by asset management companies, so by the end of the period under review, the R.N.S.C. Public Register listed 21 asset management companies (as shown in Annex 3), of which seven asset management companies did not provide individual investment portfolio management services. Asset management companies by type of business as of 31.12.2012 are shown in Figure 3 below.
Asset management companies by line of business
Source: R.N.S.C. Figure 3
21
Romanian National Securities Commission Annual Report – 2012
As regards the shareholder structure of the 21 asset management companies, 14 are controlled by Romanian natural and legal persons, while seven such asset management companies are controlled by foreign natural and legal persons (from Austria, Italy, Slovenia, Hungary, Switzerland and France).
No asset management company expressed their intention to provide services within the territory of other EU Member States.
III. Investment agents
In 2012, R.N.S.C. issued 70 authorisations for persons acting as investment agents on the Romanian capital market and 35 tied agents were registered with the R.N.S.C. Public Register.
Following the withdrawal of the authorisations granted to 147 investment agents, of which 41 tied agents, the R.N.S.C. Public Register listed as of 31.12.2012 a total of 896 investment agents, of which 307 tied agents.
G.E.O. no. 32/2012 amending Law no. 297/2004 facilitated the establishment of a legal framework for the authorisation of legal persons acting as tied agents of investment firms.
IV. Compliance officers
In 2012, R.N.S.C. has authorised 28 new compliance officers acting at the registered offices of investment firms, credit institutions, asset management companies or at the branches of investment firms throughout the country.
As of 31.12.2012, 147 persons were acting as compliance officers, following withdrawal of the authorisation granted to 33 compliance officers.
V. Capital market institutions
In 2012, R.N.S.C. received requests filed by capital market institutions concerning some amendments to the organisational structure and operations conducted, mainly amendments to the supporting documents submitted for initial authorisation purposes.
Market/System operators
R.N.S.C. has authorised some changes in the membership of the Board and executive management of the Bucharest Stock Exchange (ro. S.C. Bursa de Valori Bucureşti S.A.) by individually validating the nine directors and the chief executive officer appointed by the B.S.E. statutory body.
R.N.S.C. has also approved the appointment of a new chief executive officer for S.C. Sibex- Sibiu Stock Exchange S.A. (SIBEX) and has authorised the closing down of the Bucharest branch. In H2 2012, S.C. Sibex- Sibiu Stock Exchange S.A. filed a request for the approval by R.N.S.C. of a change in the membership of the Board, by individual validation of four new directors appointed by the Sibiu Stock Exchange statutory body.
22
Romanian National Securities Commission Annual Report – 2012
R.N.S.C. has validated three directors and rejected the appointment of one such director.
Prior to the individual validation of Board members, R.N.S.C. has approved, at the request of SIBEX, the individual validation of two interim directors. Later on, the A.G.M. of the shareholders of S.C. Sibex- Sibiu Stock Exchange S.A. has approved the candidate whose appointment was individually validated by R.N.S.C.
At the request of SIBEX, R.N.S.C. has registered 11 new derivatives, of which two futures contracts and nine contracts for difference negotiable on the regulated market operated by SIBEX. Also at the request of SIBEX, R.N.S.C. has deleted one futures contract from the R.N.S.C. Public Register.
A new system operator - S.S.I.F. MUNTENIA GLOBAL INVEST S.A. - which operates BEST-X - an alternative trading system - was registered in 2012 with the R.N.S.C. Public Register, but no trading activity was reported by the end of the year.
Clearing Houses
R.N.S.C. has authorised changes in the Board membership of the Bucharest Clearing House (B.C.H.) (ro. S.C. Casa de Compensare Bucureşti S.A.) by individually validating the five directors appointed by B.C.H.’s statutory body, as well as changes in the Board membership of the Romanian Clearing House (R.C.H.) (ro. S.C. Casa Română de Compensaţie S.A.), by validating one director, and also approved the closing down of the latter’s Bucharest branch.
Central Depositories
At the request of the Central Depository (ro. S.C. Depozitarul Central S.A.), R.N.S.C. has authorised a change in the depository’s authorisation, following the appointment of a new Board member.
As regards S.C. Depozitarul Sibex S.A., R.N.S.C. has authorised the depository’s new logo, as well as the change in the depository’s executive management.
Investors Compensation Fund (ro. S.C. Fondul de Compensare a Investitorilor S.A.)
In 2012, R.N.S.C. has approved an amendment to the Fund’s articles of association by authorising the Board of Directors to exercise the duties of the annual general meeting of shareholders with respect to establishing the registered office and branches.
VI. Collective Investment Undertakings
Undertakings for collective investment in transferable securities (UCITS) and collective investment undertakings other than UCITS make up the collective investment undertakings (CIU) category.
The Romanian CIU market segment was steady, with no decrease in business volumes, as the number of investment funds, in particular closed-end investment funds, went up consistently.
23
Romanian National Securities Commission Annual Report – 2012
Undertakings for collective investment in transferable securities
In 2012, R.N.S.C. has authorised four new open-end investment funds: MONOLITH, CARPATICA OBLIGAŢIUNI, ERSTE MONETAR and ETF BET TRADEVILLE. R.N.S.C. has also withdrawn the authorisations of three open-end investment funds: BCR MONETAR, BRD DINAMIC PLUS and BRD ECHILIBRAT, subsequently deleting the aforementioned funds from the R.N.S.C. Public Register.
R.N.S.C. has also approved a change in the name of Certinvest Monetar to Certinvest Tezaur and of iFond Monetar to iFond Conservator.
By comparison to the 2011 year-end, when 63 open-end investment funds were active on the Romanian capital market, in 2012, the R.N.S.C. Public Register listed 64 open-end investment funds. Annex 4 shows the open-end investment funds authorised by R.N.S.C.
No request for the distribution of fund units issued by a UCITS based in Romania within the territory of another EU Member State was filed with R.N.S.C. in 2012.
During the period under review, R.N.S.C. has approved a number of amendments to the documents of open-end investment funds, mainly as regards changes to investment policies, changes of depository fees, subscription/redemption fees, and other changes.
Also in the period under review, R.N.S.C. has continued to issue Ordinances to freeze the cash and securities accounts opened by S.C. Pactinvest S.A. on behalf of the open-end investment fund Fondul Naţional Retcon, and has continued the actions started in 2011 for the dissolution of Fondul Naţional Retcon by initiating proceedings for the identification of investors in the fund.
Collective investment undertakings other than UCITS
Five new closed-end investment funds (i.e. Matador, Active Plus, Active Invest, Multicapital Invest, and DCP Investiţii) were registered with the R.N.S.C. Public Register in 2012, while one closed-end investment fund - OTP WISERO - was deleted from the R.N.S.C. Public Register. As of 31.12.2012, 26 closed-end investment funds were registered with the R.N.S.C. Public Register, as shown in Annex 5.
In the period under review, financial investment companies filed a number of requests for the approval of amendments to the documents submitted for initial registration with the R.N.S.C. Public Register. These mainly referred to amendments to internal regulations, depository agreements and changes in Board membership and executive management. Following the entry into force of Law no. 11/2012 amending Law no. 297/2004 on the capital market, the five financial investment companies have amended their articles of association accordingly.
Also in the same framework, R.N.S.C. has approved a number of amendments to the documents submitted at initial registration of S.C. Fondul Proprietatea S.A., namely the constitutive deed and the management contract agreed with 24
Romanian National Securities Commission Annual Report – 2012
Franklin Templeton Investment Management Ltd. - United Kingdom, Bucharest branch. Annex 6 shows the financial investment companies registered with the R.N.S.C. Public Register as of 31.12.2012.
VII. Depositories
In 2012, there were no amendments to the documents submitted by depositories for registration purposes as regards the organisational structure and the duties of the department in charge of depository services provided in accordance with the provisions laid down in R.N.S.C. Regulation no. 15/2004 on the authorisation and functioning of asset management companies, collective investment undertakings and depositories. As of the end of 2012, the R.N.S.C. Public Register listed ten depositories, as shown in Annex 7.
VIII. Professional training and the professional certification of capital market experts
In 2012, the professional training bodies authorised by R.N.S.C. provided a number of 32 basic training courses and 55 continuous professional training courses. R.N.S.C. issued 157 professional certificates for capital market experts and operators acting as investment agents, compliance officers or investment advisors.
Also in 2012, one professional training body requested to be deleted from the R.N.S.C. Public Register. Annex 8 shows the training bodies certified by R.N.S.C.
IX. Investment advisors
In 2012, R.N.S.C. has withdrawn, upon request, the authorisation of a legal person investment advisor, while another natural person investment advisor was registered with the R.N.S.C. Public Register.
Thus, as of 31.12.2012, 24 natural persons and three legal persons acted as investment advisors on the Romanian capital market. Annex 9 and Annex 10 show natural person investment advisors and legal person investment advisors, respectively.
X. Valuators
In 2012, R.N.S.C. has authorised a new legal person - KPMG ADVISORY S.R.L. - acting as valuator. As of 31.12.2012, three natural persons and 16 legal persons were registered as valuators with the R.N.S.C. Public Register.
Annex 11 shows all natural and legal person valuators.
XI. IT auditors
There were no changes in the list of IT auditors registered with the R.N.S.C. Public Register reported for 2011.
XII. Groups
As of end-2012, three groups: O.M.V., S.C. Alro S.A. and Rompetrol were registered with the R.N.S.C. Public Register. R.N.S.C. has certified one change in the membership structure of O.M.V. Group in the period under review.
25
Romanian National Securities Commission Annual Report – 2012
3.2.2. Authorisation and approval of market operations
In accordance with the provisions laid down in the relevant capital market legislation, R.N.S.C. has approved in 2012:
- 14 prospectuses for the (primary/secondary) offering of shares and bonds. Simplified prospectuses were also approved as follows:
one simplified prospectus for an offering (where shares may be purchased by investors who seek to purchase for at least the RON equivalent of EUR 50,000);
six simplified prospectuses for stock option plans for employees, executive officers and shareholders.
In H1 2012, R.N.S.C. has approved the prospectus for the secondary public offering of the shares owned by the Ministry of Economy, Commerce and Business Environment in S.C. C.N.T.E.E. Transelectrica S.A. The main features of the public offerings of shares are shown in Table 6 below.
one simplified prospectus for the public offering of bonds issued by a local public authority. The value of the issuance was RON 625.27 thousand;
three simplified prospectuses for the offering of bonds to the issuing company’s shareholders. So far, the value of the issuance is RON 12,500 thousand. The main features of the public offerings of bonds are shown in Tables 7 and 8 below.
- 14 documents for public takeover bids amounting to RON 254,542.73 thousand;
- the issuance of two decisions concerning price-fixing with respect to mandatory takeover bids pursuant to the findings of an independent valuator’s report;
- two decisions to reject the documents for mandatory takeover bids due to price reasons;
- five documents for public purchasing offers amounting to RON 565.92 thousand;
- five preliminary prospectuses aimed at prospective investors;
- one prospectus seeking admission to trading on the regulated market operated by B.S.E. of an offering of bonds to qualified investors (S.C. GDF SUEZ ENERGY ROMANIA S.A.);
- one preliminary announcement for a voluntary takeover bid;
26
Romanian National Securities Commission Annual Report – 2012
- five announcements aimed at prospective investors in shares/bonds; - five announcements concerning squeeze-out proceedings prepared by the shareholders who met one of the two conditions set out in art. 206 of Law no. 297/2004; - five announcements concerning squeeze-out proceedings prepared by shareholders who met the requirements set out in art. 207 of Law no. 297/2004. As regards the market operation referred to in art. 206 of the Capital market Law, eight procedures for the withdrawal from trading of the shares issued by S.C. AMEROPA GRAINS S.A. Constanţa, S.C. GENERALI ROMÂNIA ASIGURARE REASIGURARE S.A. Bucureşti, S.C. GRANTMETAL S.A. Bucureşti, S.C. Decorint S.A. Cluj-Napoca, S.C. SERVICII TEHNICE COMUNALE S.A. Sovata, S.C. AZOMUREŞ S.A. Târgu Mureş, S.C. CONPRIF S.A. Buzău, TRANSPORT AUTO MARFA S.A. Timişoara have been completed. In H1 2012, R.N.S.C. has approved the prospectus for the structured products of an issuer whose shares are traded on the Romanian capital market (i.e. S.S.I.F. Broker S.A. Cluj-Napoca). As a result of supervisory actions, R.N.S.C. has decided to notify 52 shareholders who have exceeded (individually or jointly with other persons acting in concert) the 33% or 50% threshold of voting rights in the (31 issuing) companies whose shares are admitted to trading on the capital market with regard to the mandatory requirement to comply with the legal provisions concerning mandatory takeover bids. R.N.S.C. has also issued 106 individual sanctions by fine/warning for non-compliance with the legal provisions in force. In accordance with the relevant legal provisions prepared in line with corresponding European Union directives, R.N.S.C., as competent authority of the host state, receives from similar authorities from other Member States prospectuses approved by the latter authorities, the certificate and the summary in Romanian language of the said prospectuses. In accordance with the legal regulations in force, R.N.S.C. is not involved in the approval of the aforementioned prospectuses. In 2012, R.N.S.C. was notified with respect to the approval of 17 prospectuses, as well as with regard to various amendments thereto. The prospectuses for the public offering of shares and bonds approved by R.N.S.C. in 2012 are shown in Tables 6 and 7 below.
Prospectuses for the public offering of shares approved in 2012
Table 6 Values Price No. Issuer Offerr Shares sold (RON (RON) thousand) S.C. NATURA S.C. NATURA QUATTUOR 1 QUATTUOR ENERGIA ENERGIA HOLDINGS S.A. 0.35 0 0 HOLDINGS S.A. Bucureşti Bucureşti Ministry of Economy, 15.71 for low-value C.N.T.E.E. Commerce and Business subscriptions, 2 TRANSELECTRICA S.A. Environment, through the 10,995,472 164,723.19 14.9 for high-value Bucureşti Office for State Ownership and subscriptions Privatisation in Industry 27
Romanian National Securities Commission Annual Report – 2012
Values Price No. Issuer Offerr Shares sold (RON (RON) thousand) RON 2.6/share, initially. S.C. CONSTRUCŢII Initial price to be reduced 3 S.I.F. OLTENIA S.A. 0 0 FEROVIARE S.A. Craiova daily, on each business day of the offering New Europe Property New Europe Property 4 Insvestment PLC Insvestment PLC 13.99 1,600,000 3,476.04 Isle of Man * Isle of Man S.C. BANCA S.C. BANCA TRANSILVANIA 5 TRANSILVANIA S.A. S.A. 0 9,362,130 0 Cluj-Napoca** Cluj-Napoca S.C. BANCA S.C. BANCA TRANSILVANIA 6 TRANSILVANIA S.A. S.A. 0 4,637,870 0 Cluj-Napoca*** Cluj-Napoca S.C. BANCA S.C. BANCA TRANSILVANIA 7 TRANSILVANIA S.A. S.A. 0 129,384,347 0 Cluj-Napoca** Cluj-Napoca S.C. BANCA S.C. BANCA TRANSILVANIA 8 TRANSILVANIA S.A. S.A. 0 778,366 0 Cluj-Napoca** Cluj-Napoca S.C. FARMACEUTICA S.C. FARMACEUTICA 9 0 778,366 0 REMEDIA S.A. Deva** REMEDIA S.A. Deva S.C. ROPHARMA S.A. 10 S.C. ROPHARMA S.A. Braşov 0 496,448 0 Braşov* TOTAL 168,199.23
Source: R.N.S.C.
* Simplified prospectuses for investors who seek to purchase securities of at least the RON equivalent of EUR 50,000.
** Offering for employees and executive officers.
*** Shares allotted free of charge to shareholders on a pro-rata basis.
Prospectuses for the public offering of bonds approved in 2012
Table 7 Value Bonds Price Bonds Maturity No. Issuer (RON issued (RON) purchased (years) thousand) 1 S.C. GDF SUEZ ENERGY ROMANIA* 25,000 10.000 25,000 250,000 5 2 THE TOWN OF HOREZU 90,000 10 62,527 625,27 3 S.C. ORGANE DE ASAMBLARE S.A. 3 2,200,000 2.5 2,200,000 5,500 4 Braşov** 4 S.C. TUŞNAD S.A. Băile Tuşnad** 3,200,000 2.5 2,800,000 17,500 5 Ongoing 5 S.C. TURISM COVASNA S.A.** 8,784,530 2.5 2 (26.04.2013) TOTAL 273,625.27
Source: R.N.S.C.
* Offering for qualified investors.
** Offering for issuer’s shareholders.
28
Romanian National Securities Commission Annual Report – 2012
In 2012, the number of public offerings for the sale of shares and the number of public takeover bids and public purchasing offers hit a five-year record low, while the number of public offerings for the sale of bonds was the same as in 2011. The number of public offerings for the sale of corporate bonds reached a five-year record high. The evolution in the number of public offerings in the period 2008-2012 is shown in Table 8 below. Evolution in the number of public offerings in the period 2008-2012 Table 8 2008 2009 2010 2011 2012 Total in the Operation % of % of % of % of % of Offers Offers Offers Offers Offers period total total total total total 2010-2012 Public offerings for the sale of 21 44.68 11 28.21 14 36.84 14 36.84 10 26.32 70 shares, of which: - primary 11 61.11 1 5.88 6 25.00 10 41.67 8 33.33 36 - secondary 10 34.48 10 45.45 8 57.14 4 28.57 2 14.29 34 Public offerings for the sale of 1 33.33 1 3.33 1 16.67 1 16.67 4 66.66 8 corporate bonds Public offerings for the sale of 7 33.33 10 66.66 4 66.66 1 16.67 1 16.67 23 municipal bonds Public purchasing 46 42.59 29 34.12 33 44.00 23 30.67 19 25.33 150 offers/Public takeover bids Total: 75 51 52 39 34 251
Source: R.N.S.C.
The value of public offerings reached a five-year record high in 2012, while the value of public purchasing offers has gone up significantly year-on-year. The evolution in the value of public offerings in the period 2008-2012 is shown in Table 9 below. Evolution in the value of public offerings in the period 2008-2012 Table 9 Value (RON thousand) Type* 2012/ 2011 % 2008 2009 2010 2011 2012 PO 352,701.65 263,471 245,647.75 111,653.49 441,824.53 395.71
PPO/PTB 108,358.20 64,067.84 393,094.15 4,752.8 255,108.65 5,367.54
Source: R.N.S.C.
* PO = public offering, PPO = public purchasing offer, PTB = public takeover bid.
29
Romanian National Securities Commission Annual Report – 2012
3.3. OFF-SITE AND ON-SITE SUPERVISION
3.3.1. Supervision of regulated entities R.N.S.C. oversees the activities conducted by regulated entities and follows up closely on strict compliance with capital market laws and regulations. R.N.S.C. analyzes the financial statements submitted by regulated entities and takes action with a view to protect investors and prevent deterioration of regulated entities’ financial statements. Supervisory disclosure and free access to information, as well as investor protection were the core objectives of R.N.S.C.’s supervision and enforcement actions in 2012. Investment firms (ro. S.S.I.F.) An investment firm is defined in art. 7 para. (1) sub-paragraph 6 of G.E.O. no. 99/2006 as any legal person whose current line of business involves the provision of one or several investment services to third parties and/or the performance of one or several investment activities on a professional basis; investment firms are also defined in Law no. 297/2004 on the capital market, as amended and supplemented. Regarding compliance with rules of conduct, investment firms are supervised pursuant to the provisions laid down in R.N.S.C. Regulation no. 32/2006 on investment services; from compliance with prudential requirements and capital adequacy point of view, investment firms are supervised pursuant to the provisions laid down in R.N.S.C. Instruction no. 8/2007 on the reporting of minimum capital requirements; investment firms are also supervised pursuant to the provisions laid down in G.E.O. no. 99/2006 on credit institutions and capital adequacy, as approved and amended by Law no. 227/2007, and the joint N.B.R./R.N.S.C. regulations issued for the implementation thereof. The short-term development of the Romanian capital market relies heavily on restoring consumer confidence and sustainable economic growth, and the evolution of international markets. In 2012, poor performance obtained from exercising capital market activities led to authorisation withdrawal of six investment firms. Thus, as of 31.12.2012, there were 46 authorised investment firms, of which: - 29 investment firms were authorised to provide all the investment services referred to in art. 7 para. (1) sub-paragraph 6 and art. 421^1 of Government Emergency Ordinance no. 99/2006 on credit institutions and capital adequacy, approved by Law no. 227/2007, i.e. 63% of all authorised investment firms; - 17 investment firms (i.e. 37% of all authorised investment firms) were not authorised to engage in proprietary trading, to underwrite securities on a firm commitment basis, or act as operator of an alternative trading system. Following the analysis and verification of regular reports and following investigation of investment firms, R.N.S.C. has identified violations of applicable regulations and has taken various administrative measures. The sanctions enforced in 2012 with respect to investment firms are shown in Table 10 below.
30
Romanian National Securities Commission Annual Report – 2012
Sanctions enforced in 2012 with respect to investment firms
Table 10 No. Sanctions No. of sanctions
1. Fines for investment firm persons in charge 9
2. Warnings for investment firm persons in charge 4
3. Watch list 1
4. Requirement to comply with the legal provisions within a certain time limit 3
5. Suspension of investment firm authorisation/persons 1
Source: R.N.S.C. Supervisory actions performed in 2012 resulted in two hearings aimed at clarifying some issues relating to the activities conducted by investment firms. For supervisory purposes, investment firms submitted reports pursuant to the provision laid down in G.E.O. no. 99/2006 on credit institutions and capital adequacy. Following the review of capital adequacy reports and with the aim to enforce remedial action, R.N.S.C. has issued 143 warning letters concerning the accuracy of such reports. Findings mainly referred to inappropriate securities classification into risk categories, inaccurate securities valuation pursuant to the provisions laid down in the joint N.B.R./R.N.S.C. regulations and inaccurate adding up or subtraction of equity items. For supervisory purposes and in accordance with the provisions laid down in art. 153 of R.N.S.C. Regulation no. 32/2006, investment firms have submitted to R.N.S.C. the following statements and documents: - monthly, quarterly or half-yearly statements in accordance with the provisions laid down in the regulations issued for the implementation of G.E.O. no. 99/2006 on credit institutions and capital adequacy; - reports on securities lending, short sales and margin purchases within maximum 10 days from the closing of the reporting period; - half-yearly reports within the term set by R.N.S.C. regulations, comprising the half-yearly financial statements including balance sheet, profit and loss account, statement of changes in equity and the cash flow statement; - annual reports within the term set by R.N.S.C. regulations, comprising: i) annual financial statements including balance sheet, profit and loss account, statement of changes in equity, cash flow statement, accounting policies and explanatory notes; ii) Directors’ Report; iii) Auditor’s Report; - internal auditor’s reports submitted together with annual reports; - reports on revenue (by category of investment services) and expenditure for each investment firm branch, submitted together with annual reports. No later than 31 January each year, investment firms submit to R.N.S.C. data concerning the company’s shareholder structure, board membership,
31
Romanian National Securities Commission Annual Report – 2012 investment agents, the list of authorised investment services, updated and completed, together with: - a list of authorised branches, including investment agents and compliance officers, when appropriate; - a report on the structure of individual investment portfolios; - a report on disciplinary action against executive officers, investment agents and compliance officers; - a list of brokerage agreements concluded with other brokers and the scope of such agreements; - a report on authorised activities subject to outsourcing. No later than 31 March each year, investment firms submit to R.N.S.C. a report concerning the relevant organisational structure and accounting system. Following the review of all the above mentioned reports, R.N.S.C. has issued 17 warnings requesting some additional data and explanatory notes on some items and/or differences. In the course of 2012, R.N.S.C. has conducted an investigation over some irregularities in the business of an investment firm; the investigation resulted in the sanctioning of the person in charge for breaching applicable legal provisions. R.N.S.C. has issued several alerts concerning various companies which were not authorised by R.N.S.C. to provide investment services pursuant to the provisions laid down in Law no. 297/2004 on the capital market, but nevertheless engaged in an aggressive pursuit of prospects for Forex trading. The supervision of investment firms involved both the review of reports/statements and the review of various complaints received from natural/legal persons or state institutions. In 2012, R.N.S.C. has resolved 116 complaints/requests received from natural/legal persons, state authorities and other institutions. Three requests received from County Police Inspectorates (ro I.P.J.) and the Directorate for Investigating Organised Crime and Terrorism (ro. D.I.I.C.O.T.) were aimed at the activities conducted by 590 individuals through various investment firms. The requests for information received from other public institutions are shown in Table 11 below. Requests for information received from other public institutions Table 11 No. Institution No. of requests Ministry of Administration and Interior (ro. MAI) - General Directorate of 1 12 Bucharest Police (ro. DGPMB) and County Police Inspectorates (ro. I.P.J.) Prosecutor’s Office attached to the High Court of Justice (ro. P.I.C.C.J) 2 /National Anticorruption Directorate (ro. DNA) and Prosecutor’s Office 6 attached to the Supreme Court of Justice 3 President of Romania, Government of Romania 7 4 National Authority/County Office for Consumer Protection 4 5 National Agency for Fiscal Administration (ro. A.N.A.F.) 1 6 Other public institutions 6 Total 36
Source: R.N.S.C.
32
Romanian National Securities Commission Annual Report – 2012
Credit institutions In 2012, 12 credit institutions authorised by NBR in accordance with the applicable banking laws in force were listed in the R.N.S.C. Public Register and submitted reports to R.N.S.C. in accordance with the provisions laid down in Regulation no. 32/2006 on investment services, namely the compliance department’s report on capital market operations and the report of the officer in charge of the department concerning capital market operations. In the period under review, R.N.S.C. has sent four letters to credit institutions concerning compliance with rules of conduct relating to record keeping and submission of various reports.
Collective Investment Undertakings (CIUs) The core objective of the supervision of collective investment undertakings is ensuring investor protection and fostering investor confidence in this type of investment which involves the active use of individual financial resources. As in the previous years, asset management companies were engaged in the pursuit of improved performance by matching investment/disinvestment operations with opportunities on the Romanian money and capital market. CIUs as of 31.12.2011 are shown in Table 12 below.
CIUs as of 31.12.2012 Table 12 No. Type of entity No. of entities 1 Asset management companies 21 2 Open-end investment funds 64 3 Closed-end investment funds5 24 4 Financial investment companies (ro S.I.F.) 5 5 Fondul Proprietatea 1 6 Depositories 10
Source: R.N.S.C. As of 2012 year end, five fund categories were active on the Romanian capital market: equity funds, diversified funds, fixed income funds (i.e. bond funds), money market funds and other types of funds. In 2012, there was a change in the preference of asset managers towards open-end investment funds whose investment strategy was focused on medium and long-term investments in debt securities (bonds), with a corresponding decrease in risk tolerance. As of 31.12.2012, the classification of UCITS in accordance with the investment policy indicated in the relevant issue prospectuses, as authorised by R.N.S.C., shows as follows: 18 equity funds, 19 diversified funds, 22 bond funds, one money market fund, four other funds.
5 Two of the closed-end investment funds authorised in 2012 were not active by the end of the year. 33
Romanian National Securities Commission Annual Report – 2012
In accordance with the provisions laid down in R.N.S.C. Instruction no. 8/2007, asset management companies whose line of business includes the management of individual investment portfolios and individual accounts are required to submit to R.N.S.C. a quarterly report on capital adequacy. Asset management companies whose line of business includes the management of individual investment portfolios but excludes the management of individual accounts are required to submit to R.N.S.C. a quarterly binding statement of the Chairman of the Board endorsed by the asset manager’s compliance officer that no individual investment portfolios have been managed in the underlying period, plus a statement of the asset management company’s own funds. The aggregate review of individual investment accounts shows that 11 asset management companies were managing 142 individual investment accounts with a net asset value of RON 83,050,863.2. Following the review of regular reports and the activity conducted by asset management companies, R.N.S.C. has identified instances of breaching some relevant legal provisions and has taken various administrative actions. In 2012, four asset management companies which are based in other EU Member States and manage various UCITS have notified R.N.S.C. of their intention to distribute the shares of such UCITS in Romania, in accordance with the provisions laid down in R.N.S.C. Instruction no. 5/2007 on the notification of undertakings for collective investment in transferable securities (UCITS) in Member States. 3,0001 natural persons and 13 legal persons have subscribed the fund units of 53 investment funds for a total subscription value of RON 116,757,688.51. To facilitate compliance and meet the requirements for the effective supervision of distribution in Romania of fund units issued by such undertakings for collective investment in transferable securities, R.N.S.C. has issued a requirement for the legal representatives of the said UCITS to submit a quarterly statement concerning the number of fund units sold to investors, the name of the funds whose units were sold and the value of assets in the portfolio.
Market operators In 2012, the supervision of the two market operators, namely the Bucharest Stock Exchange (B.S.E.) and Sibiu Stock Exchange (SIBEX) followed two main directions: - verification of compliance with the provisions laid down in Law no. 297/2004 on the capital market and R.N.S.C. Regulation no. 2/2006 on regulated systems and alternative trading systems, as amended and supplemented; - verification and review of current and regular reports (annual, half-yearly, quarterly, monthly) in accordance with the provisions laid down in R.N.S.C. Regulation no. 2/2006 on regulated systems and alternative trading systems, as amended and supplemented; - verification of the shareholder structure of each market operator, as well as of compliance with the provisions laid down in art. 129 of Law no. 297/2004 on the capital market.
34
Romanian National Securities Commission Annual Report – 2012
In 2012, the B.S.E. spot market reported 647,974 transactions with 12,533,192,975 securities transfers and a value of RON 7,436,052,589.07, while the derivatives market reported 1,964 transactions with 30,423 derivatives transfers and a value of RON 40,210,352.15. The alternative trading system (A.T.S.) reported 50 participants in 2012. While in 2011, the number of issuers was only 10, in 2012, 16 other companies whose shares are admitted to trading on a regulated market in the European Union and a market in the United States of America participated in the system. The year 2012 market the admission to trading on the A.T.S. of the first Romanian company - S.C. PRO VORBAS S.A. The A.T.S. reported 5,947 transactions with 122,248 share transfers and a value of RON 16,845,136.86. The review of the assessments performed by S.C. Bursa de Valori Bucureşti S.A. for January-December 2012 shows no irregularities as regards trading and no notices to participants as to irregularities in omnibus account trading. As regards the operations conducted by SIBEX, the derivatives market reported 1,473,356 contracts, while the spot market reported 155 transactions and a volume of 4,732,266 shares. The spot market segment operated by SIBEX gave market participants the opportunity to engage in trading on the regulated spot market and within the alternative trading system. The A.T.S. reported 134 transactions with a volume of 778,527 securities transfers and a value of RON 3,545,740.64. Mention should be made that, just like in the previous year, the shares of S.C. Prodplast Imobiliare S.A. were the only ones traded within SIBEX’s A.T.S. in 2012. R.N.S.C. found no infringements by market operators in 2012.
Clearing and Settlement Systems The following entities are in charge of clearing and settlement operations on the Romanian capital market: the Central Depository, the SIBEX Depository, the Bucharest Clearing House and the Romanian Clearing House. The Bucharest Clearing House and the Romanian Clearing House facilitate the day-to-day clearing and marking-to-market of open positions, as well as the settlement of transactions executed on the regulated derivatives market operated by B.S.E. and SIBEX. The Central Depository and the SIBEX Depository are in charge of depository and registry services in relation with the securities traded on regulated markets. The supervision of the four aforementioned entities revolved around: - verification of compliance with the provisions laid down in Law no. 297/2004 on the capital market and R.N.S.C. Regulation no. 13/2005 on the authorisation and functioning of the Central Depository, clearing houses and central counterparties; - verification of current (weekly and monthly) reports and regular (annual, half-yearly and quarterly) reports submitted to R.N.S.C. in accordance
35
Romanian National Securities Commission Annual Report – 2012
with the provisions laid down in: Decision on measures no. 2/2010, Decision on measures no. 12/2010, R.N.S.C. Regulation no. 5/2010 and R.N.S.C. Regulation no. 13/2005. In 2012, the review and verification of the reports submitted to R.N.S.C. by the Central Depository, the SIBEX Depository, the Bucharest Clearing House and the Romanian Clearing House showed no irregularities. Just as in the previous year, the 2012 investment policy of the four entities focused on limiting risk exposure through investments in current accounts, term deposits, Government securities with maturities less than one year and government bonds fully guaranteed by the state Government, within the limits set in the investment policy of clearing houses, as indicated in R.N.S.C. Regulation no. 13/2005.
Investors Compensation Fund The Investors Compensation Fund (ro. Fondul de Compensare a Investitorilor) had 72 members by 2012 year-end, of which 46 investment firms, 12 credit institutions and 14 asset management companies. While the maximum compensation limit for the previous year was EUR 15,000 for each individual investor, in 2012 the same limit was raised to EUR 20,000, in accordance with the criteria set out in art. 12 of R.N.S.C. Regulation no. 10/2006 amending Regulation no. 3/2006. R.N.S.C. has reviewed the statements submitted by the Investors Compensation Fund on a monthly basis. Such statements referred to investments of managed funds and own funds and the annual report prepared in accordance with the provisions laid down in R.N.S.C. Regulation no. 3/2006 on the authorisation, organisation and functioning of the Investors Compensation Fund, as amended and supplemented. No compensation was awarded in 2012.
3.3.2. Supervision of securities issuers Throughout the whole year 2012, R.N.S.C. has continued to supervise issuers in the pursuit of adequate investor protection and easy access to information. At 2012 year start, R.N.S.C. records showed 1,288 companies whose shares were traded on the capital market, while at the end of the same year, records showed a number of 1,193 companies, as follows: - 79 companies whose shares were traded on the regulated market operated by B.S.E.; - 25 companies whose shares were traded on the unlisted securities market which uses the B.S.E. trading system; - 1,086 companies whose shares were listed on B.S.E. - RASDAQ; - one company whose shares were traded within the alternative trading system operated by B.S.E.; - two companies whose shares were listed on SIBEX.
36
Romanian National Securities Commission Annual Report – 2012
In 2012, the shares of 98 companies were withdrawn from trading, as follows:
- 25 companies pursuant to the provisions laid down in Decision on measures no. 8/2006 concerning issuers’ withdrawal from trading as a result of a resolution passed by the company’s Extraordinary General Meeting of shareholders;
- eight companies as a result of squeeze-out proceedings in accordance with the provisions laid down in art. 206 of Law no. 297/2004;
- 65 companies pursuant to the provisions laid down in art. 234 indent (d) of Law no. 297/2004, due to the impossibility to keep an orderly market for the company’s securities (63 companies which opened/completed bankruptcy/winding-up proceedings, two companies whose Annual General Meeting of shareholders approved the company’s conversion into a closed company).
In 2012, the shares of two issuers traded on the RASDAQ market (S.C. STIROM S.A. BUCUREŞTI and S.C. CALIPSO S.A. ORADEA) were admitted to trading on the regulated market operated by B.S.E., pursuant to the resolutions passed by the Extraordinary General Meeting of shareholders.
In the same period, a new company whose shares were admitted to trading on B.S.E. - RASDAQ (S.C. CERESCOMTRAVEL S.A. CĂLĂRAŞI) - was registered with R.N.S.C.
In H1 2012, the bonds issued by S.C. BANCA COMERCIALĂ ROMÂNĂ S.A. pursuant to the base prospectus approved by C.S.S.F. Luxembourg (Commission de Surveillance du Secteur Financier) within the “EUR 3,000,000,000 Euro Medium Term Note Programme” (i.e. 27 issuances) were also registered with R.N.S.C. subject to the provisions laid down in R.N.S.C. Instruction no. 4/2011, supplemented by R.N.S.C. Decision no. 1060/21.10.2011 - 27 issuances.
In H2 2012, the shares issued by S.C. PRO VORBAS S.A. Bucureşti were registered with R.N.S.C. and admitted to trading on the Alternative Trading System operated by B.S.E.
Also in the course of 2012, 104 issuances of structured products - 93 issuances of ERSTE GROUP BANK AG AUSTRIA and 11 issuances of S.S.I.F. BROKER S.A. Cluj-Napoca - were registered with R.N.S.C. in view of admission to trading on B.S.E.
New securities issuances or amendments to the features of existing issuers are registered with R.N.S.C. through the issuance of a Securities Registration Certificate (S.R.C.). In 2012, R.N.S.C. issued 208 such Securities Registration Certificates. The evolution in the number of Securities Registration Certificate by underlying operation is shown in Table 13 below.
37
Romanian National Securities Commission Annual Report – 2012
Evolution in the number of Securities Registration Certificates by underlying operation Table 13 Number of Securities Registration Certificates issued, of which S.R.C. traded on: Underlying Regulated Alternative RASDAQ / Not admitted to TOTAL operation market Trading System SIBEX Not listed on trading in operated by operated by B.S.E. Romania B.S.E. B.S.E. Share capital 15 - 31 - - 46 increase Share capital 4 1 5 - - 10 decrease Spin-off - - 3 - - 3 Merger 1 - 1 - - 2 Change in the nominal value of - - 3 - - 3 one share Newly-established - - 1 1 - 2 companies Bond issuances 1 - - - - 1 International bond - - - - 27 27 issuances Government 8 - - - - 8 securities Structured 104 - - - - 104 products Pre-emptive rights 1 - 1 - - 2 Total 134 1 45 1 27 208
Source: R.N.S.C. The following are some of the significant events of 2012: i. the structured products issued by S.S.I.F. BROKER S.A. Cluj-Napoca are admitted to trading on the regulated market operated by B.S.E.; ii. the bonds issued by GDF Suez Energy România S.A. are registered with the R.N.S.C. Public Register and admitted to trading on B.S.E. All the companies whose shares are admitted to trading on the regulated market (i.e. B.S.E. - categories I, II and III, and SIBEX - SHARES category) publish their annual, half-yearly and quarterly reports by means of the IT Reporting System ((ro. Sistem Informatic de Raportare) (SIR)). The said reports are available at: http://oam.rnsc.ro:11003/oam/. R.N.S.C. is also overseeing compliance of financial information with the applicable accounting regulations (i.e. I.F.R.S. and national accounting standards). The screening process is in line with C.E.S.R. Standard no. 1 on financial information issued by the European Securities and Markets Authority (E.S.M.A.). The standard applies both to companies whose securities are admitted to trading on the regulated market and to companies which apply to R.N.S.C. for admission to trading on the regulated market. R.N.S.C. supervises regulated financial information (i.e. individual and consolidated annual and interim reports, current reports, prospectuses).
38
Romanian National Securities Commission Annual Report – 2012
R.N.S.C. has reviewed compliance of financial information with national accounting regulations (i.e. accounting regulations in line with European Directives - Annex 1 to Order no. 3055/2009 of the Minister of Finance and R.N.S.C. Regulation no. 4/2011 on the approval of Accounting regulations in line with the provisions laid down in the Fourth Directive (EEC) applicable to entities authorised, regulated and supervised by R.N.S.C.). Thus, of the 78 issuers (as of 31 December 2011) on the regulated market (B.S.E. and SIBEX), the auditors of 61 companies issued unqualified opinions, the auditors of 16 companies issued qualified opinions and the auditors of one company issued an adverse opinion (UCM Reşiţa - suspended from trading). 29 companies were audited by some of the largest international audit firms, while 49 companies were notified with respect to findings relating to inaccurate, incomplete or misstated information. R.N.S.C. has also verified compliance of financial information with International Financial Reporting Standards. In accordance with the provisions laid down in Order no. 1121/2006 of the Minister of Finance, “Companies whose securities are admitted to trading on a regulated market as of balance sheet date and prepare consolidated financial statements must implement International Financial Reporting Standard starting with the financial year 2007.” In 2012, companies produced 26 consolidated financial statements, of which 19 were audited by some of the largest international audit firms which issued seven qualified opinions and one adverse opinion. R.N.S.C. has found the following breaches of I.F.R.S. provisions, subsequently notified to the relevant companies: - a service concession agreement was not valued at fair value on acquisition date (I.F.R.S. 3.18). - 2 cases; - due to a breach of an undertaking under long-term loan agreements, such loan agreements should be reclassified as current (I.A.S. 1.74). - 3 cases; - inventories were not stated at net realisable value (I.A.S. 2.9); - no information on the financial impact of lawsuits (I.A.S. 37.86); - the revaluation model of property, plant and equipment is not the same at group level (I.A.S. 16.36); - unrecognised impairment provision for trade receivables for which the holder may not recover substantially all of its initial amount (I.A.S. 39.58); - no depreciation was determined for idle assets (I.A.S. 16.55). Four companies have been notified of breaching I.A.S. 1.16 “(…) Financial statements shall not be described as complying with I.F.R.S.s unless they comply with all the requirements of I.F.R.S.s (including interpretations).” In accordance with R.N.S.C. Instruction no. 6/2011, “The entities authorised, regulated and supervised by R.N.S.C. (…) must prepare for information purposes a second set of annual financial statements under I.F.R.S. for the financial year 2011 and 2012; such annual financial statements will be prepared within 180 days from the closing of the financial year and will comprise the data reported in the annual financial statements prepared under the Accounting regulations in line with the Fourth Directive (EEC) applicable to the entities authorised, regulated and supervised by R.N.S.C. restated under I.F.R.S.” 39
Romanian National Securities Commission Annual Report – 2012
In 2012, nine such annual financial statements were published by companies which also act as issuers on the capital market. Seven of them were audited by some of the largest international audit firms, and only one qualified opinion was issued. R.N.S.C. has found the following breaches of I.F.R.S. provisions, subsequently notified to the relevant companies: - non-observance of I.A.S. 29 “Financial reporting in hyperinflationary economies”; - non-recognition of impairment loss for available-for-sale assets (I.A.S. 39); - the use of valuation methods for available-for-sale assets which do not observe the provisions of I.F.R.S. (I.A.S. 39); - no disclosure for available-for-sale assets (gains and losses measured through profit and loss under I.F.R.S. 7 paragraph 20); - no disclosure on the fair values of each class of financial instruments (under I.F.R.S. 7 paragraphs 25, 27A, 27B and 28); - no quantitative and qualitative disclosures on risk management (under I.F.R.S. 7 paragraphs 34, 40 and 41); - no disclosure on the effect of the first time adoption of I.F.R.S. on financial performance (under I.F.R.S. 1 paragraph 23); - no complete comparative data for the previous years (deferred tax income and expense included in profit or loss by category of temporary differences under I.A.S. 12 paragraph 81; reconciliation of the carrying amount for property, plant and equipment under I.A.S. 16 paragraph 73). R.N.S.C. has also verified issuers with respect to compliance with the provisions laid down in Law no. 297/2004 on the capital market (including companies on the regulated market). In February 2012, approximately 1,206 issuers were notified with respect to the content and time limit for the submission of the 2011 annual report (art. 227 (1) and (4) of Law no. 297/2004 on the capital market). 260 issuers were sanctioned by warning for failure to submit their 2011 report to R.N.S.C. and the market operator. Following examination of 983 issuers, R.N.S.C. has issued 456 notifications concerning the submission of annual reports to the market operator, the publication of the same on the companies’ own websites and the supplementation of the reports in accordance with the legal provisions in force. R.N.S.C. has also responded to 135 requests filed by issuers concerning reporting requirements, namely the type of reports, reporting terms, auditing, dividend distribution and current reports under art. 225 of Law no. 297/2004. R.N.S.C. received 39 complaints concerning RASDAQ issuers (for non-compliance with the format and content of reports, non-observance of reporting terms, and dividend distribution issues); all the complaints were resolved by warning the relevant issuers and by sending responses to complainants. Companies whose securities are admitted to trading on the capital market are required by capital market legislation to submit current reports to R.N.S.C. and the market operator in view of providing accurate information to investors and observing the rights of shareholders in annual general meetings.
40
Romanian National Securities Commission Annual Report – 2012
Consequently, as regards the preparation and submission of current reports to R.N.S.C. and the market operator, the calling and holding of annual general meetings, insolvency/winding-up/turnaround proceedings, changes of legal status, changes in share capital or withdrawal of trading, R.N.S.C. has conducted 158 investigations. Following the investigations, R.N.S.C. has decided on the implementation of the following measures: - the warning of the executive officers of the companies whose shares are traded on B.S.E. - RASDAQ - seven issuers; - the issuance of three ordinances to freeze stocks subject to litigation for a single period of two weeks - three issuers; - the issuance of 13 ordinances to freeze stocks subject to outstanding litigation until final and irrevocable court decision by competent courts - one issuer; - the issuance of one ordinance comprising the measures required to repeat the calling of the annual general meeting in accordance with the legal provisions in force; - the issuance of an ordinance comprising the measures required to amend the calling notice for the annual general meeting in accordance with the legal provisions in force; - the issuance of two ordinances comprising the measures required for cancelling the suspension of voting rights subject to a Board of Directors’ resolution - two issuers; - the issuance of an ordinance establishing the requirement for the director of a securities issuer to publish some documents for transparency and disclosure purposes; - the warning of a legal person who holds the chair of an issuer; - the warning of the chairman of an issuer’s statutory body; - 10 fines of RON 500 for chairmen of Boards of Directors - 10 issuers; - fines of RON 500 for Board members - five issuers; - three fines of RON 1,000 for chairmen of Boards/sole director - three issuers; - one fine of RON 1,000 for a Board member - one issuer; - one fine of RON 5,000 for the chairman of the Board - one issuer; - two fines of RON 5,000 for Board members - one issuer; - two fines of RON 5,000 for persons who abusively held management positions - two issuers; - two fines of RON 10,000 for chairmen of Boards of Directors - two issuers; - two fines of RON 10,000 for members of the Board of Directors - one issuer. With a view to protect investors, R.N.S.C. has focused on the resolution of the complaints received. The complaints filed with R.N.S.C. by natural and legal person investors have facilitated the identification of the most common problems and obstacles encountered on the capital market, with the aim to determine the most appropriate preventive actions. In 2012, R.N.S.C. has received and reviewed approximately 7,521 current reports and 308 complaints, petitions, inquiries and requests for information. The complaints received by R.N.S.C. in 2012 with regard to issuers compliance are shown in Table 14 below.
41
Romanian National Securities Commission Annual Report – 2012
Complaints received by R.N.S.C. with regard to issuers compliance Table 14 No. of No. Subject matter complaints 1. Non-payment of dividends 38 2. The passing of A.G.M. resolutions 43 3. Share transfers and release of account statements 3 5. The activity of Boards of Directors and executive officers 23 7. Issuer spin-off and withdrawal from trading 3 8. Cumulative voting and abuse of majority shareholding 1 9. Issuer reports 46 The sale of shares of issuers whose securities are no longer traded on a 10. 4 regulated market 11. Other complaints 111 Total 272
Source: R.N.S.C.
R.N.S.C. was also required to express its opinion on various requests for information received from other state institutions and authorities (the Prosecutor’s Office attached to the High Court of Justice, the Ministry of Administration and Interior - General Inspectorate of the Romanian Police, the Chamber of Deputies). R.N.S.C. has conducted investigations and examinations with a view to provide accurate information and responses. The requests for information received from other State institutions are shown in Table 15 below.
Requests for information received from other State institutions Table 15 No. of No. Institution requests Ministry of Administration and Interior - Directorate General of Bucharest 1. 2 Police and County Police Inspectorates The Prosecutor’s Office attached to the High Court of Justice/ 2. 2 National Anticorruption Directorate 3. Chamber of Deputies 2 Total 6
Source: R.N.S.C.
3.3.3. Supervision of financial instruments trading R.N.S.C. is committed to the supervision of brokerage services and transactions executed within trading venues, as well as to the review of trading price and volume deviations with a view to identity potential instances of market abuse. To this end, R.N.S.C. experts rely on issuer reports and software tools, as well as on the in-house developed electronic supervisory systems - B.S.E.’s ARENA Terminal and SIBEX’s ELTRANS Terminal. B.S.E.’s trading system is divided into various market segments, as follows:
A. Shares: - Regular - the main B.S.E. market segment, comprising two Regular sub-sections: REGS - for trading in already listed shares and fund units - and RGBS - for shares transferred from the RASDAQ system;
42
Romanian National Securities Commission Annual Report – 2012
- RGSI - the B.S.E. market segment for trading in shares issued by legal persons based in EU Member States; - Odd Lot - the B.S.E. market segment for trading in lots of less than 100 shares, comprising two sub-sections similar to the Regular market segment - ODDS and ODBS; - Deal - the B.S.E. market segment comprising three sub-sections similar to the Regular market segment - DEALS, DLBS and DLSI; - POF - the B.S.E. market segment comprising sub-sections similar to the Regular market segment for underwriting shares in the public offerings of issuers listed on B.S.E. and RASDAQ, as well as for transactions such as special sales to order; - Buy-In and Sell-Out - B.S.E. market segments which are complementary to the Regular market segment, for order-driven trading initiated by B.S.E. for error correction purposes; - XMBS, XDEAL and XORDR - RASDAQ’s OTC market segments; - UNLS - the market segment for unlisted shares.
B. Bonds: - ORDB - the main market for bond trading; - QIDB - Deal market for bond trading; - POFB - Public Offering market for bond trading; - UNLB - market segment for trading in bonds issued by unlisted companies; - REGT and DLST - market segments for trading in Government bonds.
C. Derivatives: - REGF - the B.S.E. market segment for trading in futures on the forward market operated by B.S.E.
D. Allotment rights: - ORDR and DEALR - the B.S.E. market segments for trading in share allotment rights.
E. Structured products: - RGSP - the B.S.E. market segment for trading in structured products: notes, warrants and other structured products. The number of financial instruments on B.S.E. is shown in Table 16 below.
Number of financial instruments on B.S.E. Table 16 Market No. of issuances No. of issuances No. Financial instrument Main market segment as of 31.12.20116 as of 31.12.2012 1 B.S.E. Shares REGS 77 77 2 B.S.E. Shares RGSI 2 2 3 B.S.E. Shares UNLS 25 25 4 B.S.E. Shares POF 0 0 5 B.S.E. Bonds ORDB 38 39
6 The line (-) means a market not yet established. Zero (0) means an existing market with no issuers. 43
Romanian National Securities Commission Annual Report – 2012
Market No. of issuances No. of issuances No. Financial instrument Main market segment as of 31.12.20116 as of 31.12.2012 6 B.S.E. (Government) Bonds REGT 22 29 7 B.S.E. Bonds POFB 0 0 8 B.S.E. Futures REGF 54 47 9 B.S.E. Rights ORDR 0 0 10 B.S.E. Rights ORDRI 0 1 11 B.S.E. Fund units REGS 5 5 12 B.S.E. Structured products RGSP 69 67 13 RASDAQ Shares XMBS 913 847 14 RASDAQ Shares RGBS 104 97 Not shown in the 15 RASDAQ Shares 167 142 Arena system 16 A.T.S. Shares XRSI 10 15 17 A.T.S. Shares XRSA - 11 18 A.T.S. Shares XRS 0 1
Source: R.N.S.C. Starting 01.02.2012, the omnibus account system and the mechanism without securities pre-validation has been expanded to all financial instruments subject to trading on the regulated spot market operated by B.S.E. R.N.S.C. Decision no. 1094/28.11.2012 established the regulatory framework for the expansion of the omnibus account system and the mechanism without securities pre-validation on the RASDAQ market as well as on the unlisted shares market. So, as of 14.01.2013, all B.S.E. spot markets employ the same system. The ELTRANS Terminal was used for the real time supervision of trading on SIBEX as well as for the review of trading by type of financial instruments and accounts. SIBEX operates the regulated spot market, the alternative trading system and the regulated derivatives market. The number of derivatives contracts on SIBEX is shown in Table 17 below. Number of derivatives contracts on SIBEX Table 17 Financial derivatives Underlying assets 31.12.2011 31.12.2012 interest rates 0 0 shares 14 18 foreign currencies 9 9 Futures indexes 3 3 oil 1 1 gold 2 2 Binary options foreign currencies 4 4 shares 13 13 foreign currencies 3 3 Standard options gold 1 1 indexes 1 1 CFD 6 6 CO2 1 1 Shares 2 2
Source: R.N.S.C. 44
Romanian National Securities Commission Annual Report – 2012
R.N.S.C. reports any market abuse event to other state institutions, such as the National Anticorruption Directorate (ro. D.N.A.), the Directorate for Investigating Organised Crime and Terrorism (ro. D.I.I.C.O.T.), the National Office for the Prevention and Control of Money Laundering (ro. O.N.P.C.S.B.), the National Agency for Fiscal Administration (ro. A.N.A.F.) and the Ministry of Administration and Interior (ro. M.A.I.). R.N.S.C. also performs reviews and investigations at the request of other authorities. In 2012, R.N.S.C. has submitted reports or responses to other authorities, as follows: 14 such reports or responses to D.I.I.C.O.T., four to M.A.I., three to D.N.A., two to O.N.P.C.S.B. and two to A.N.A.F.
3.3.4. On-Site Inspection In accordance with the provisions laid down in the Capital market Law and for supervisory purposes, R.N.S.C. may conduct on-site inspections at the premises of the entities authorised, regulated and supervised by R.N.S.C. The R.N.S.C. expert teams examine compliance with the provisions laid down in capital market laws and regulations. When conducting such on-site inspections, R.N.S.C. is entitled to request any information as well as access to any document, irrespective of the format, from and relating to any person or entity subject to inspection. R.N.S.C.’s on-site inspection actions follow an annual on-site inspection plan approved by R.N.S.C. By conducting scheduled inspections, R.N.S.C. ensures the regular examination of the entities authorised, regulated and supervised by R.N.S.C. Inspections are also conducted as a result of various findings of R.N.S.C. directorates with regard to capital market operations, as well as of investor complaints or requests from other authorities. According to the 2012 enforcement action plan, R.N.S.C.’s expert teams conducted 34 on-site inspections concerning: - 20 brokers (17 investment firms and three credit institutions); - 10 asset management companies (including 45 investment funds, of which 30 open-end investment funds and 15 closed-end investment funds); - 4 depositories (which provided depository services for the 10 asset management firms subject to examination). With a view to ensure compliance with the 2012 amendments to the legal framework, R.N.S.C. has updated the themes of inspections according to the type of entity subject to examination. The main themes of inspections conducted in 2012 are shown in Table 18 below.
45
Romanian National Securities Commission Annual Report – 2012
Main themes of inspections conducted in 2012 Table 18 Entity subject Main themes to inspection - investment services authorised and actually delivered, initial share capital; - registered offices; - organisational structure and changes in organisational structure and operations; - organisational requirements; - internal procedures; - documents, information and reports to clients and prospects; - suitability and appropriateness tests; - client classification and notification of such classification; - safekeeping of client assets; - conflicts of interest; Brokers - investment research; - inducements; - rules regarding order execution and the handling of client orders; - personal account dealings; - fraud; - cross-border operations; - disclosure requirements; - own funds; - prevention and control of money laundering and terrorist financing; - international sections. - services provided and delegated business; - management of individual investment portfolios; - own funds; - changes in organisational structure and operations; - internal compliance; - prudential rules; - risk management policy; - rules of conduct; Asset - reporting requirements and disclosure requirements with regard to the funds management managed; companies - open-end investment funds: authorisation and operations; - asset valuation; - net asset value calculation; - investment policies; - marketing open-end investment funds; - issuance and redemption of fund units; - prevention and control of money laundering and terrorist financing; - international sanctions. - establishment of a specialised department for the company’s depository business with appropriate equipment and staff; - changes subject to R.N.S.C. approval; - separate recording of assets subject to safekeeping; - observance of instructions received from asset management companies; - observance of the prohibition to transfer, pledge, dispose of or secure the Depositories securities and cash of the undertaking for collective investment in transferable securities, except when requested by the asset management company; - net asset value calculation; - reporting to R.N.S.C. any abuse on the part of the asset management company involving UCITS assets subject to safekeeping; - sub-depository services; - termination of depository services.
Source: R.N.S.C.
46
Romanian National Securities Commission Annual Report – 2012
Besides the scheduled inspections (conducted according to the annual enforcement action plan), R.N.S.C. has also conducted ad-hoc on-site inspections7 whose topics were established on a case-by-case basis. In accordance with the provisions laid down in art. 2 para. (5) sub-paragraph f.) of Law no. 297/2004, as amended and supplemented, the investigations conducted by R.N.S.C. resulted in the issuance of nine hearing ordinances. The on-site inspection and investigation actions conducted by R.N.S.C. in 2012 have resulted in sanctions, recommendations to implement remedial actions and/or reports to other competent institutions or authorities, such as the National Office for the Prevention and Control of Money Laundering, the Prosecutor’s Office attached to the High Court of Justice - Directorate for Investigating Organised Crime and Terrorism, the General Inspectorate of Romanian Police - Directorate for Fraud Investigation, National Authority for Fiscal Administration, Chamber of Financial Auditors in Romania, Association of Chartered and Certified Accountants in Romania. In 2012, R.N.S.C. has issued a total of 123 sanctioning ordinances, of which 51 warnings, 71 fines (amounting to RON 316,157.2), nine authorisation withdrawals and seven prohibitions to conduct business. The sanctions enforced in 2012 following inspections are shown in Table 19 below. In accordance with the legal provisions in force, sanctioning acts are published in the R.N.S.C. Bulletin for disclosure purposes. Sanctions enforced in 2012 following inspections Table 19 Entities subject to sanctioning Sanctions enforced Number of sanctions enforced - warning 51 - fine 65 Brokers - authorisation withdrawal 9 - prohibition 7 Asset management companies - fine 6
Source: R.N.S.C. Sanctions are determined considering personal and factual circumstances, as well as the behaviour of the offender. In accordance with the provisions laid down in Law no. 297/2004, R.N.S.C. may sanction individuals who, in the capacity thereof as directors, legal representatives, de jure/de facto managers or professionals providing services regulated under the law, may be held liable due to failure to prevent the offence. The pro-active role exercised by R.N.S.C. also involved the issuing of: - notices to the entities subject to examination and the officers/compliance officers and persons in charge of enforcing the provisions laid down in Law no. 656/2002, as amended and supplemented; - mandatory requirements for the entities subject to examination to implement remedial actions. R.N.S.C. has also pursued follow-up actions with respect to the sanctions enforced.
7 Two investment firms and two asset management firms. 47
Romanian National Securities Commission Annual Report – 2012
3.3.5. Legal Activity In 2010, by way of Decision no. 2098/04.06.2009 of the Penal Court of the High Court of Justice, R.N.S.C. was required to pay civil compensation to approximately 130,000 former F.N.I. investors. The enforcement of a writ of execution against R.N.S.C. in the aforementioned case involving the investors of the National Investment Fund (ro. F.N.I.) has generated significant additional pressure on R.N.S.C.’s human and material resources, as well as on the staff’s workload. Just like in 2011, R.N.S.C. was again subject to the enforcement of a writ of execution concerning the freezing of the account opened with the Treasury and Public Accounting of Bucharest (ro. ATCPMB). In this particular instance, the amounts claimed by creditors exceeded the aforementioned account balance. With a view to identifying pertinent solutions for the situations arising from the enforcement of the court decisions issued in the F.N.I. case, and considering that R.N.S.C. is unable to operate due to the freezing of the accounts, R.N.S.C. has drafted and submitted, besides the appeals filed with competent courts (pursuant to the remedies set forth in the Civil Procedure Code), several memos and letters to state authorities highlighting that the impact of court decisions exceeds R.N.S.C.’s institutional framework and financial resources. In 2011, the legal framework concerning the enforcement of writs of execution against public institutions has been supplemented with two normative acts which allowed R.N.S.C. to narrowly resume operations; the two normative acts are: - Law no. 92 of 6 June 2011 to approve Government Emergency Ordinance no. 4/2011 on the establishment of some measures for the reorganisation of the Authority for State Assets Recovery and for the enforcement of writs of execution against public institutions (implemented by Order no. 2336/2011 of the Minister of Public Finance approving the Procedure for the enforcement of writs of execution requesting the freezing of public authorities and institutions accounts opened with the State Treasury); - Law no. 116/2011 on the establishment of some transitional measures concerning the operations of the Authority for State Assets Recovery and R.N.S.C., valid until 31 December 2013. The amounts payable by public authorities and institutions pursuant to the enforcement of writs of execution may be settled only from resources other than those earmarked for organisational and operating expenditure according to the approved budget. Even though the two laws indicated above are meant to facilitate R.N.S.C.’s operations, there is still a multitude of requests from enforcers to freeze R.N.S.C. accounts, to proceed to the forced sale of some R.N.S.C. buildings, and to freeze the amounts owed by the capital market entities regulated and supervised by R.N.S.C. in accordance with the legal provisions in force.
48
Romanian National Securities Commission Annual Report – 2012
With respect to the 2,590 enforcement files, R.N.S.C. has filed motions to suspend and dispute enforcement. Mention should be made that there is no way to determine the exact scale of all potential claims. So far, court enforcers have presented the claims of approximately 5,500 former F.N.I. investors, amounting to EUR 21.5 million. Given that the total number of persons who incurred losses was 130,000, we may estimate the extraordinary amount of potential claims against R.N.S.C., considering that the R.N.S.C. budget is only aimed at establishing resources for the discharge of R.N.S.C.’s legal duties. From a legislative perspective, the forced sale of one of the buildings used as R.N.S.C. office and the fact that R.N.S.C. is not able to discharge duties without an office resulted in the passing of G.E.O. no. 39/2012 which provides that the buildings used as R.N.S.C. offices are to become state property. Regarding the disputes specific to capital market operations, 83 new files have been opened against R.N.S.C., which added to the files whose subject matter was appeals against enforcement of writs of execution, temporary injunctions and approvals to freeze accounts with regard to F.N.I. files, as well as to the files already pending court resolution. Consequently, R.N.S.C. has handled, besides the F.N.I. files, 274 court cases totalling 900 hearings. R.N.S.C. acted as respondent in: - administrative disputes aimed at the annulment or suspension of some administrative acts issued by R.N.S.C. for: the enforcement of some sanctions for non-compliance with capital market laws; the withdrawal of authorisation or deletion from the R.N.S.C. Public Register; compliance with capital market requirements (requirements for mandatory public takeover bids, suspension of voting rights in the case of shareholders whose holdings exceed the threshold set out in the law, discontinuing the suspension of voting rights as a result of breaching applicable legal provisions); compliance by investment firms with applicable capital market provisions pursuant to recommendations following on-site inspections; compliance with legal provisions and rules of conduct by investment firms, the executive officers, agents and compliance officers thereof. - administrative disputes aimed at the annulment or suspension of some assimilated administrative acts (such as letters of response to various requests) or at the unjustified refusal to resolve a request (as alleged by complainants); - administrative disputes aimed at the annulment of some administrative acts having the force of law issued by R.N.S.C. (i.e. R.N.S.C. Instruction no. 1/2007) or of some other acts issued for the implementation thereof (i.e. R.N.S.C. Decision no. 994/2011); 49
Romanian National Securities Commission Annual Report – 2012
- exceptions of illegality with respect to some administrative acts issued by R.N.S.C. (i.e. R.N.S.C. Instruction no. 1/2007, Decision on measures no. 17/2009, Decision on measures no. 8/2006, Decision on measures no. 9/2010); - commercial disputes with regard to, for instance, a closed company which fails to meet the requirements for admission to trading (the cases of S.C. Minerva S.A. and S.C. Alimentara S.A.); - access to information of public concern requested pursuant to the provisions laid down in Law no. 544/2001 concerning free access to information of public concern; - claims lodged in the F.N.I. case; - disputes filed by R.N.S.C. debtors; - labour disputes. R.N.S.C. (in its own name or in the name of investors) acted as plaintiff in: - cases aimed at determining the nullity of some A.G.M. resolutions adopted in breach of capital market legislations (the case of S.C. Corint S.A.); - motions to request (respondent) companies to call A.G.M.s in accordance with the provisions laid down in art. 2 para. (3) of Law no. 297/2004 (the case of S.C. Amonil S.A.); - motions to issue summons for the payment of amounts due to R.N.S.C. by various debtors as securities record keeping charges; - requests for registration in the creditors’ list of some insolvent companies (creditors’ claims); - appeals filed against enforcement of writs of execution and temporary injunctions; - motions for the enforcement of writs of execution against various debtors; - criminal complaints. Moreover, R.N.S.C. has issued opinions to the Constitutional Court concerning various exceptions of unconstitutionality arising in several cases having as subject matter the constitutionality of the following law wordings: i) art. 286^1 of Law no. 297/2004 on the capital market, as amended and supplemented; ii) art. 78 para. (2) sub-paragraph ii of G.E.O. no. 90/2008 concerning the statutory audit of annual financial statements and consolidated annual financial statements. In the course of 2012, R.N.S.C. has filed claims with respect to 85 insolvency cases subject to Law no. 85/2006, recast, as amended and supplemented, requesting payment of the amounts owed by issuers as securities record keeping charges, interests and penalties. Some of these claims resulted in individual court cases having as subject matter appeals against the claims filed by R.N.S.C.; in its turn, R.N.S.C. has filed response memos and resorted to various legal remedies. Also in 2012, R.N.S.C. has filed with the District 3 Bucharest Court a number of 79 new requests for trial against some joint-stock companies, in the capacity thereof as issuers and debtors, pursuant to the provisions laid down in G.O. no. 5/2001 concerning payment summons, as amended and supplemented, with a view to recover the amounts owed to R.N.S.C. as securities record keeping charges.
50
Romanian National Securities Commission Annual Report – 2012
In 2012, R.N.S.C. has resolved 127 appeals filed against some measures enforced by R.N.S.C., as follows: 116 appeals - rejected, three - admitted and eight - admitted in part. The appeals filed against individual administrative acts or administrative acts having the force of law issued by R.N.S.C. were mainly concerned with: - public offerings - the mandatory requirement concerning the carrying out - of public offerings; - share capital increases in kind or in cash effected by issuers whose securities are admitted to trading; - compliance with legal provisions and rules of conduct by investment firms, the executive officers, agents and compliance officers thereof; - compliance with the regulations issued for the implementation of G.E.O. no. 99/2006 - N.B.R./R.N.S.C. Regulations no. 16/21/2006 and no. 22/27/2006; - compliance by investment firms with applicable capital market provisions pursuant to recommendations following on-site inspections; - compliance with the provisions laid down in art. 206 and art. 207 of Law no. 297/2004 concerning squeeze-out proceedings; - compliance with the provisions concerning IT auditing in entities regulated by R.N.S.C.; - compliance with regulations concerning the re-admission to trading of some issuers; - compliance with the legal provisions concerning the authorisation of some asset management companies; - compliance with legal provisions concerning issuer disclosure; - compliance with legal provisions concerning market manipulation. 69 decisions to reject appeals are currently subject to court cases. R.N.S.C. has been also involved in the preparation of reviews concerning: i) FONDUL PROPRIETATEA - steps taken for the listing of FONDUL PROPRIETATEA on the secondary market of the Warsaw Stock Exchange, the links between Depositories in Romania and Poland and the litigation concerning the asset manager of S.C. Fondul Proprietatea S.A.; ii) the draft for the amendment and supplementation of the Articles of Association of S.C. FONDUL PROPRIETATEA S.A.; iii) the Action Plan for the Prevention of Terrorism and the Prevention and Control of Money Laundering.
51
Romanian National Securities Commission Annual Report – 2012
3.4. PUBLIC INFORMATION AND INVESTOR PROTECTION
3.4.1. Supervisory disclosure
One of the objectives of R.N.S.C. is to establish, develop and maintain disclosure-based relationships, providing accurate information to investors, capital-market entities and other categories of public.
All the normative acts and individual acts issued by R.N.S.C. are published on the authority’s website (www.cnvmr.ro) on their issuance date, and weekly, in the electronic version of the R.N.S.C. Bulletin; sanctioning ordinances are published regularly in a dedicated website section.
R.N.S.C.’s regulatory activity has paid particular attention to the dialogue with capital market representatives, so that the measures implemented by means of the normative acts should provide an appropriate answer to all the specific issues confronting Romanian capital market entities.
For supervisory purposes, R.N.S.C. has continued to issue investor alerts concerning some risks, misbehaviours or unauthorised practices. Alerts are published in a dedicated website section. The same section includes alerts issued by E.S.M.A., IOSCO and R.N.S.C. counterparties in the European Union.
3.4.2. Information of public concern
Public information observes a set of rules and principles designed to protect investors and establish a transparent market framework; in 2012, R.N.S.C. has continued to make available public information concerning the activities conducted.
R.N.S.C.’s public information actions are aimed at:
- observing the persons’ right to access information in accordance with the Romanian legislation in force; - observing the principle of fair access to information and fair investor treatment, while protecting the interests of investors and other stakeholders; - establishing and maintaining various communication channels between R.N.S.C. and the public, facilitating access to public information through specialised departments; - providing institutions, the media and the population with timely and complete information (i.e. other than inside or classified information), in line with the legal regulations concerning access to public information; - building media awareness of R.N.S.C.’s market policy and main actions, with a view to ensure an accurate understanding of the measures implemented by the authority; - conducting public information and education campaigns targeting investors.
52
Romanian National Securities Commission Annual Report – 2012
For disclosure purposes, R.N.S.C. has developed and updated website sections (in the Romanian and English languages) concerning: - Regulation (EU) no. 236/2012 on short selling and certain aspects of credit default swaps - (http://www.cnvmr.ro/ro/short-selling/short-selling.htm); - Regulation (EU) no. 648/2012 on OTC derivatives, central counterparties and trade repositories - (http://www.cnvmr.ro/ro/emir.htm) In 2012, R.N.S.C.’s actions were mainly aimed at the following categories of target audience: - investment firms; - securities issuers; - natural and legal persons trading in securities on the capital market; - capital market stakeholders; - market institutions; - public institutions acting in cooperation with R.N.S.C.; - individuals interested in the developments in the F.N.I. case, pursuant to Decision no. 2098/04.06.2009 of the Penal Court of the High Court of Justice.
Media relations The partnership established with the media is based on the principle of regular, timely and easy access to information concerning R.N.S.C. The media have received timely information on all major R.N.S.C. decisions.
3.4.3. R.N.S.C. publications and other communication media
In 2012, R.N.S.C. has continued the publication of the electronic version of the R.N.S.C. Bulletin part I - The Commission’s Activity - both the special monthly edition and the weekly edition, with a view to ensure adequate supervisory disclosure and public information.
Also for disclosure purposes, the companies whose shares are admitted to trading on a regulated market under R.N.S.C. Regulation no. 1/2006 on issuers and securities operations are required to prepare, submit and publish in the R.N.S.C. electronic Bulletin the reports on inside information indicated in art. 226 para. (1) of Law no. 297/2004.
R.N.S.C.’s 2012 publications included:
- The Romanian National Securities Commission Annual Report for 2011 - printed in the Romanian and English languages; - 12 monthly editions of the R.N.S.C. Bulletin (for January-December 2012) and three supplements (for April, May and August 2012) - all printed and comprising a total of 3,120 pages; R.N.S.C.’s monthly Bulletin is now in its tenth year in issue and is registered with Romania’s publications catalogue under ISSN-1583-5421; 53
Romanian National Securities Commission Annual Report – 2012
- the Weekly electronic Bulletins, comprising the complete wording of all the individual acts issued by R.N.S.C. in 2012 (51 weekly electronic bulletins with a total of 990 pages, comprising 1,495 individual acts issued by R.N.S.C. (namely, 348 ordinances, 918 decisions, 180 certificates and 49 approvals), plus issuers’ reports (52 weekly electronic bulletins comprising 811 issuers’ reports from 101 companies); - the 12 monthly special editions published in electronic format, comprising the norms and decisions on measures issued by R.N.S.C., with a total of 127 pages, (i.e. eight regulations, seven instructions, 15 orders and 27 decisions on measures).
The 2012 monthly bulletins published by R.N.S.C. comprised a total of 1,070 reports received from 145 companies. Approximately 830 reports comprised A.G.M. calling notices, draft articles of association, resolutions of the annual and extraordinary general meetings of shareholders, resolutions of the Boards of Directors, auditors’ reports, current reports, regular reports, reports on various significant events, reports on the legal documents entered into between companies and their directors, employees, shareholders holding control positions and related parties, whose cumulated holding is at least the RON equivalent of EUR 50,000, squeeze-out notices, etc.
In 2012, R.N.S.C.’ s monthly bulletins comprised 71 annual reports for 2011 and 29 half-yearly reports for 2012.
October 2012 was the month with the highest R.N.S.C. website traffic; the R.N.S.C. website was viewed 32,833 times. The number of R.N.S.C. website visitors/views in 2012 is shown in Figure 4 below.
Number of R.N.S.C. website visitors/views in 2012
Source: R.N.S.C. Figure 4
54
Romanian National Securities Commission Annual Report – 2012
Website visitors from outside the country in 2012 are shown in Figure 5 below.
Website visitors from outside the country in 2012 (%)
Source: R.N.S.C., www.trafic.ro Figure 5 By comparison with 2011, there has been more interest in information concerning the Romanian capital market from website visitors based in USA (21.75%), Great Britain (21.04%), the Republic of Moldova (14,70%) and Germany (13,07%), while website visitors based in France have maintained approximately the same level of interest (6.23%), and website visitors based in the Netherlands (2.84%) and the Czech Republic (1.5%) have shown less interest in the same information.
3.5. R.N.S.C. COOPERATION WITH OTHER ROMANIAN PUBLIC INSTITUTIONS AND AUTHORITIES Besides current activities, R.N.S.C. has also engaged in cooperation with other Romanian public institutions with a view to perform its regulatory duties, as follows: the representatives of R.N.S.C. attended meetings with the representatives of the Ministry of Public Finance and the Ministry of Justice with regard to the review of the draft normative act concerning undertakings for collective investment in transferable securities and asset management companies prepared in line with the provisions laid down in Directive (EC) 65/2009; R.N.S.C. has conducted a review and submitted to the Ministry of Economy, Commerce and Business Environment - the Office for State Ownership and Privatisation in Industry - its opinion concerning the implementation of certain legal provisions relating to public offerings, with a view to ensure an appropriate framework for the carrying out of public offerings for the privatisation of companies where the state, through its authorised public institutions, is a shareholder; 55
Romanian National Securities Commission Annual Report – 2012
the representatives of R.N.S.C. attended the meetings of the Accounting and Financial Reporting Council (ro. C.C.R.F.) as well as the meetings of the Council’s Technical Commission, where draft normative acts prepared by N.B.R., the Ministry of Public Finance, the Association of Chartered and Certified Accountants, the Chamber of Financial Auditors and the Insurance Supervisory Commission are reviewed; the representatives of R.N.S.C. were involved in the activities of the National Committee for Financial Stability (N.C.F.S) regarding cooperation and exchange of information between the authorities in charge of ensuring financial stability, as well as the handling of issues with potential negative impact on the national financial system; the National Committee for Financial Stability (N.C.F.S.) was established pursuant to the Memorandum of Understanding on financial stability and the management of financial crises signed in 2007 by the Ministry of Public Finance, the National Bank of Romania, the Romanian National Securities Commission, the Insurance Supervisory Commission and the Private Pension System Supervisory Commission; R.N.S.C. has organised meetings with the representatives of various international organisations, other competent authorities in the financial field, state institutions, professional associations of regulated entities, consultants involved in the regulatory process and regulated entities, with a view to explain some issues of interest for the capital market, with an impact on sector-specific regulations; R.N.S.C. has been constantly preoccupied with ensuring the timely publication of international sanctions relevant for the Romanian capital market; to this end, R.N.S.C. has posted investor alerts on its website. R.N.S.C. has also acted in close cooperation with the public institutions and authorities in charge of enforcing international sanctions which are part of the Inter-Institutional Council for the enforcement of international sanctions established pursuant to the provisions laid down in G.E.O. no. 202/2008, as amended and supplemented, and coordinated by the Ministry of Foreign Affairs; the representatives of R.N.S.C. attend the meetings of the Council on a regular basis.
3.6. INTERNATIONAL RELATIONS
3.6.1. Relationship with European Union institutions In 2012, most legislative proposals coming from the European Commission have been subject to negotiation in the EU Council and the European Parliament with a view to receive the opinions of EU Member States and reach a final agreement to the satisfaction of all stakeholders in the process. A number of negotiations started in 2011 have continued mostly at political level, while other more recent ones have required R.N.S.C.’s technical expertise as Romanian capital market authority.
56
Romanian National Securities Commission Annual Report – 2012
A number of legislative files concerning market abuse, transparency of issuers, brokers and markets in financial instruments, prudential requirements for investment firms and credit institutions, credit rating agencies, social entrepreneurship funds and venture capital funds have been subject to discussion between the European Commission, the EU Council and the European Parliament. The year 2012 also marked the closing of negotiations concerning the Regulation on short selling and certain aspects of credit default swaps (i.e. Regulation no. 236/2012) and the Regulation on OTC derivatives, central counterparties and trade repositories (i.e. Regulation no. 648/2012). The Markets in Financial Instruments Directive (MiFID) will be replaced by another directive and a regulation, introducing new definitions and concepts, such as organized trading facilities and high frequency trading, as well as mandatory requirements for companies using trading algorithms with an aim to facilitate supervision of trading, plus stricter corporate governance guidelines for investment firms. E.S.M.A. will be allowed to intervene with regard to financial products and services, as long as it has reasons to believe that investor protection, the well-functioning of the markets and financial stability are at stake. The Market Abuse Directive (MAD) will be replaced by a new directive and a regulation. Proposals refer to granting competent authorities the necessary powers to enter private premises and retrieve the documents of both regulated and non-regulated entities after the issuance of a warrant by competent authorities, to conduct inspections at private or other premises with or without issuing any prior notice, and to request phone records, provided that there is reasonable suspicion that such records may provide support in investigating an instance of market abuse (where phone records means a list of calls not the content of such calls). The scope of regulation is expanded to include spot commodities markets, where competent authorities may request information from market operators in order to investigate potential instances of abuse arising from trading in derivatives on commodities, including greenhouse gas emission allowances. It is worth mentioning that the new regulations introduce greater harmonisation of sanctions, both as regards the types of sanctions which may be enforced by competent authorities, and as regards the minimum and maximum corresponding fines. The proposal of a directive modifying the Transparency Directive aims to abolish the obligation to present quarterly financial reports for all listed companies (in particular, for small and medium-sized issuers), extend the disclosure regime for half-yearly reports, provide a uniform approach for the calculation of thresholds for the notification of major holdings, reinforce the sanctioning regimes and suspend the exercise of voting rights of the issuer who has breached the notification rules on major holdings. The CRD IV package (including prudential requirements and the prudential supervision of credit institutions and investment firms) is mainly aimed at credit institutions, but also at investment firms which will be subject to the new capital requirements. The new own funds requirements concerning large exposures, qualifying holdings, position risk and credit and counterparty risk will result in higher capital requirements for the same securities portfolio.
57
Romanian National Securities Commission Annual Report – 2012
The Regulation on European entrepreneurship funds and the Regulation on European venture capital funds have a similar structure and tackle the following issues: defining the two types of funds, imposing uniform obligations on managers, imposing rules regarding the composition of the portfolios, investment techniques and eligible investment instruments, and eligible investors. The proposal for a Regulation amending Regulation (EC) no. 1060/2009 on credit rating agencies focuses on the following new requirements: extension of the scope of application to cover credit outlooks, issuers who solicit a rating will be required to engage two credit rating agencies independent from each other to issue two independent credit ratings in parallel on the same structured finance instrument; the introduction of a rotation rule (the CRA engaged should not be in place for more than 3 years), the consultation of stakeholders on the new rating methodologies or the proposed changes and submission to E.S.M.A. for approval. R.N.S.C. has been directly involved in the preparation of new legal provisions concerning retail products, central depositories, CIU depositories, and the new measures for the restructuring and management of credit institutions and investment firms. The proposal for a Regulation on key information documents for PRIPs provides that certain investment products should be accompanied by a document comprising relevant information when offered to retail investors. The regulation also aims at a common standard for the format and content of the document. The key information document should contain information as regards the features of the product, as well as the costs and the risk profile, so that investors may have a clear picture of potential gains and losses, as well as of the complexity of the product. The proposal for the regulation also establishes the definition for the types of products which require the disclosure of a key information document, i.e. products with protection and other guarantees, including open and closed-end investment funds, all structured products and insurance products. The proposal for a Directive establishing a framework for the recovery and resolution of credit institutions and investment firms is aimed at the effective management of crises by credit institutions and investment firms, thus minimising exposure to insolvency. The solution proposed is resolution - an alternative to normal insolvency procedures, providing a means to restructure or wind down an institution that is failing. Resolution procedures should be implemented by resolution authorities, which may be national central banks, national financial supervisory authorities, deposit guarantee schemes, ministries of finance or other designated authorities. Early actions require the drawing up of recovery plans in order to restore financial viability in case of material deterioration of financial situation. Recovery plans will be prepared at individual or group level. When the trigger conditions for resolution are satisfied, authorities will have the power to apply the following resolution tools: sale of business, bridge institution (full or partial transfer of an institution’s business to a publicly controlled entity), asset separation and bail-in. The proposal for a Directive modifying Directive 65/2009/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities focuses on three areas: a definition
58
Romanian National Securities Commission Annual Report – 2012 of the duties and responsibilities of all the depositories acting on behalf of UCITS, the establishment of clear rules concerning the remuneration payable to UCITS managers according to the long-term interest of investors and the investment objectives, a common approach to sanctioning material breaches of the legal framework applicable to UCITS and the establishment of common standards concerning administrative fines which should always outweigh the potential benefits derived from breaching legal provisions. The proposal for a Regulation on improving securities settlement in the European Union and on central securities depositories (CSDs) introduces for the first time the requirement for the authorisation and supervision of CSDs. The Regulation provides for a European passport for central securities depositories as well as for a harmonised sanctioning framework. R.N.S.C.’s international affairs involved participation in a number of meetings and working groups of European/international bodies, as follows: the representatives of R.N.S.C. have attended the meetings of the Council of the EU task force on draft regulations concerning European venture capital funds and European social entrepreneurship funds; R.N.S.C., as member of the European Securities and Markets Authority, has been pro-actively involved in the authority’s working groups by sending answers to questionnaires concerning the liability and sanctions regime applicable with regard to prospectuses, as well as other aspects relating to capital market regulation and supervision, reviewing working documents prepared at group level and providing comments; the representatives of R.N.S.C. have participated in the International Monetary Fund “Preliminary national risk assessment” project, involving the gathering of opinions/perceptions on money laundering vulnerabilities in Romania; R.N.S.C. has worked in cooperation with the Ministry of Public Finance in the negotiation process concerning the draft Directive on a common system of financial transaction tax amending Directive 2008/7/EC within the task force on tax matters - indirect taxation; the representatives of R.N.S.C. have been involved in discussions with the representatives of the International Monetary Fund on topics relating to the independence of the capital market authority, the role of the Bucharest Stock Exchange in the development of the Romanian capital market, privatisation and dual listing, including the transparency and reporting requirements for companies whose securities are traded on the capital market; the representatives of R.N.S.C. have attended the meetings of the Council of the EU task forces and have submitted opinions in the process of negotiation on revising Directive 65/2009/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, Directive 2003/6/EC on insider dealing and market manipulation (market abuse), Directive 2004/39/EC on markets in financial instruments, amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council 59
Romanian National Securities Commission Annual Report – 2012
and repealing Council Directive 93/22/EEC, revising Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and Commission Directive 2007/14/EC; the representatives of R.N.S.C. have participated in the meetings of the Council of the EU task forces and have submitted opinions in the process of negotiation on the draft regulation on improving securities settlement in the European Union and on central securities depositories (CSDs), amending Directive 98/26/EC, as well as on the draft regulations on European venture capital funds and European social entrepreneurship funds; the representatives of R.N.S.C. have attended the meetings of the EU Member States working party on financial instruments reviewing issues such as the acquisition and disposal of financial instruments in securities accounts, shadow banking and the re-use of collateral (rehypothecation). European Securities and Markets Authority (E.S.M.A.) E.S.M.A. contributes to safeguarding the stability of the European Union's financial system by ensuring the integrity, transparency, efficiency and orderly functioning of securities markets, as well as enhancing investor protection. E.S.M.A. fosters supervisory convergence both amongst securities regulators, and across financial sectors by working closely with the other European Supervisory Authorities competent in the field of banking (E.B.A.), and insurance and occupational pensions (E.I.O.P.A.). According to its work programme, E.S.M.A.’s priorities for 2012 were aimed at: the introduction of a new regulatory framework, contribution to financial stability, financial consumer protection and operational set up. In 2012, E.S.M.A.’s work on establishing a single rulebook focused on drafting binding technical standards particularly in areas such as: OTC derivatives, post-trading issues, short selling, alternative investment funds, issuers and prospectuses. E.S.M.A. has also prepared guidelines and recommendations for regulators and market participants in areas such as: automated trading, European social entrepreneurship funds, exchange traded funds and investment firms. E.S.M.A. has reviewed and provided recommendations with regard to the draft legislation under discussion in the European Parliament and Council concerning markets and financial instruments (MiFID 2 and MiFIR), market abuse (MAD and MAR), credit rating agencies (CRA3), securities settlement and central securities depositories. In the first half of 2012, E.S.M.A has completed the peer review exercise on the Prospectus Directive Good practices. Romania’s score was 83%, similar to that of Great Britain, Malta and Slovenia. The peer review was conducted by E.S.M.A.’s Review Panel, a standing committee carrying out peer reviews of competent authorities for supervisory convergence purposes. E.S.M.A. has also completed the mapping exercise concerning the use of sanctions under MAD. The main areas of concern were: the administrative fines and criminal sanctions imposed by EU Member States when sanctioning market abuse,
60
Romanian National Securities Commission Annual Report – 2012 the use of administrative powers for sanctioning purposes, the criminal sanctions enforced by courts following investigations conducted by competent authorities. In the second half of 2012, the Review Panel has conducted three other peer review exercises: the Peer review on supervisory practices with regard to market abuse; the Peer review on supervisory practices with regard to conduct of business rules; the Peer review on the European money market fund guidelines. The representatives of R.N.S.C. were involved in the task force on supervisory practices with regard to rules of business conduct. Peer reviews were aimed at gathering data on the sanctioning regime with regard to rules of business conduct. The areas concerned in the mapping exercise were: The supervisory approach of EU Member States, for instance, risk-based supervision; Supervisory tools: individual reviews, theme investigations; Cooperation with other regulators; Resources, technical capabilities and budget; Preventive actions, such as professional training, communication with marketing officers, etc. The peer review of the C.E.S.R. Guidelines on a common definition of European money market funds was aimed at reviewing the application and implementation of the guidelines. The Guidelines entered into force on 1 July 2011 and granted money market funds a transitional period of six months for investments acquired prior to 1 July 2011. For the purposes thereof, R.N.S.C. issued Instruction no. 1/2012 on money market funds, which entered into force on 30 January 2012. The peer review on supervisory practices with regard to market abuse in the period 2010-2011 has focused on areas such as: Supervisory practices of competent authorities regarding investment firms, regulated markets and MTFs, if applicable, obligations to have necessary market abuse investigation capabilities; Supervisory practices of competent authorities regarding the treatment of insider lists and price-sensitive information; Procedures of competent authorities regarding requests for information from other EU Member States; The number of suspicious transaction reports (SRTs) submitted to competent authorities; The arrangements/procedures in place in competent authorities as regards the handling of rumours; The handling of complaints/tip-offs to detect market abuse. Considering that there are no E.S.M.A. guidelines or good practices at European level establishing the supervisory framework for this particular MiFID requirement,
61
Romanian National Securities Commission Annual Report – 2012 the peer review on supervisory practices with regard to conduct of business rules involved two steps: First, a mapping exercise focusing on establishing good supervisory practices with regard to conduct of business rules for investment firms; Second, a peer review on the implementation of such good practices by EU Member States. This second step will be completed by the end of H1 2013. Both the mapping exercise and the peer review are aimed at the following: Types of authorised firms - asset management companies, firms operating under MiFID; Type of communication, such as: promotions, marketing communications, disclosure documents, customised recommendations, post-sales communication; Content of communication: information regarding investment firms/ asset management companies, associated risks, related costs; Persons to whom communication is addressed: professional clients, retail clients, general communication or customised communication; Types of products: MiFID products, high risk products, complex products; Distribution channels: e-mail, internet (including social networks) and other electronic media; Additional national requirements; The supervisory process implemented by national authorities.
3.6.2. Relationship with other international bodies
1. International Organization of Securities Commissions (IOSCO) In the course of 2012, R.N.S.C. has continued its involvement in the actions conducted by IOSCO, particularly in the actions of the Emerging Markets Committee, but also of other working committees. On the occasion of the Annual Conference in Beijing, R.N.S.C., as member of the European Regional Committee, has become a member of the IOSCO Transitional Board. Established for a transitional period of two years (2012-2014), the Transitional IOSCO Board has 32 members and subsumes the functions of the Executive Committee, preparing for a larger role in 2014. This new Transitional Board is set to identify the best means to ensure participation in the IOSCO Board of members with jurisdiction over large markets and review the possibility for all IOSCO members to be included in the future IOSCO Board. The duties of the Executive Committee (comprising R.N.S.C. as a member) include: preparing the annual action plan and budget for approval by the Presidents’ Committee, acting as a link between IOSCO members, drafting recommendations for new members, appointing the Secretary General, drafting recommendations for the Presidents’ Committee agenda, drafting recommendations for imposing sanctions, etc.
62
Romanian National Securities Commission Annual Report – 2012
The agenda of the 2012 IOSCO Annual Conference included topics such as: The future of the Emerging Markets Committee (EMC). According to IOSCO’s new strategy, EMC will continue to exercise its duties until 2014 (with a transitional period between 2012 and 2014). One of the issues discussed was whether the dissolution of the Emerging Markets Committee might have a negative impact on its members. Consequently, the EMCAB meeting of 8 February 2012 decided on the setting up of a working group on the future EMC, whose duties would comprise the review of the impact of the transitional period on the Committee’s members and potential issues regarding the new role and functions of the new committee or of a new replacement structure having the same and/or additional functions. R.N.S.C., as member of the Emerging Markets Committee, has been involved in the debates concerning EMC’ future role; The European Regional Committee (ERC) - ERC members who had not yet become MMoU signatories were required to present progress reports that outline the latest status and progress of their MMoU application; ERC members’ legislative developments. Greece was the only country to announce major developments, as well as a potential exit from the Eurozone, due to financial difficulties. 2. Cooperation with French speaking countries R.N.S.C. has furthered its cooperation with French speaking countries and attended in June 2012 the annual meeting of the Francophone Institute for Financial Regulation (IFREFI); this presidents’ and experts’ meeting was organised by the Quebec authority. The two R.N.S.C. representatives who attended the 2012 annual meeting delivered two presentations: “Recent developments on the Romanian capital market” and “Consumer education and awareness of consumer behaviour”. 3. Requests for information In 2012, R.N.S.C. has continued on the path of cooperation and exchange of information with other EU Member State authorities with a view to ensure an effective cross-border supervisory framework, while strengthening resident and non-resident investor protection. The requests for information submitted/ received in 2012 are shown in Table 20 below. Requests for information submitted/received in 2012 Table 20 EU Member States/ Requests for information Requests for information third countries submitted received EU Member States 7 2 Third countries 0 0 Total 7 2
Source: R.N.S.C. By comparison with the previous year, the number of requests for information submitted by R.N.S.C. to EU Member States has increased due to an enhanced supervisory process, in the context of the current international economic crisis; on the other hand, there were no requests for information submitted to or received from third countries. 63
Romanian National Securities Commission Annual Report – 2012
3.6.3. Notifications received by R.N.S.C. from competent authorities of EU Member States Brokers based in EU Member States, representatives of investment firms and credit institutions, as well as asset management companies may provide within the territory of Romania the core investment services and ancillary services referred to in Annex no. 1 to Directive 2004/39 EC, as well as collective and individual portfolio management services and ancillary services pursuant to art. 6 of Directive 2009/65/EC by way of the freedom to provide services. I. Investment firms R.N.S.C. registers investment firms with the R.N.S.C. Public Register as “Brokers which provide investment services in Romania”, following the receipt of notifications from the representatives of competent authorities in the relevant EU Member States; notifications are prepared in a standardised format agreed by all authorities concerned. In 2012, following the notifications received from the competent authorities of some EU Member States, R.N.S.C. has registered 211 investment firms with the R.N.S.C. Public Register and has deleted 50 investment firms from the same Register. As of 31.12.2012, of the 1,362 investment firms registered with the R.N.S.C. Public Register, 1,168 firms were based in Great Britain, 79 in Cyprus, 18 in the Netherlands, 15 in Ireland, 10 in Norway, 10 in Bulgaria, 10 in France, eight in Germany, six in Luxembourg, five in the Czech Republic, four in Malta, four in Austria, three in Spain, two in Gibraltar, three in Greece, two in Slovakia, two in Italy, two in Belgium, two in Sweden, two in Poland, one in Denmark, one in Finland, one in Estonia, one in Malta, one in Hungary, one in Liechtenstein and one in Lithuania. The R.N.S.C. Public Register also listed six branches of investment firms from other EU Member States, two of which were registered in the course of 2012. Investment firms from other EU Member States registered with the R.N.S.C. Public Register as of 31.12.2012 are shown in Annex 12 and Figure 6 below.
Investment firms from other EU Member States registered with the R.N.S.C. Public Register
Source: R.N.S.C. Figure 6
64
Romanian National Securities Commission Annual Report – 2012
II. Credit institutions from other EU Member States The competent authorities of EU home Member States submit notifications to N.B.R., which then forwards such notifications to R.N.S.C. for the purpose of registration with the R.N.S.C. Public Register. Thus, credit institutions from other EU Member States which seek to provide the financial services referred to in art. 5 para. (1) and para. 11 of Law no. 297/2004, as amended and supplemented, within the territory of Romania are registered as “Brokers which provide investment services in Romania”. In 2012, R.N.S.C. has registered with the R.N.S.C. Public Register 15 credit institutions based in EU which expressed their intention to provide investment services within the territory of Romania by way of the freedom to provide services. The current number of credit institutions registered with the R.N.S.C. Public Register is 144, of which 40 are based in Great Britain, 22 in Austria, 17 in Luxembourg, 12 in Ireland, 13 in Germany, 10 in France, seven in the Netherlands, two in Gibraltar, three in Malta, two in Belgium, one in Cyprus, two in Denmark, two in Finland, two in Greece, four in Lichtenstein, three in Italy, one in Spain, one in Hungary, plus three branches of credit institutions from other EU Member States. Credit institutions from other EU Member States registered with the R.N.S.C. Public Register are shown in Annex 13 and Figure 7 below.
Credit institutions from other EU Member States registered with the R.N.S.C. Public Register
Source: R.N.S.C. Figure 7
III. Asset management companies from other EU Member States In the period under review, one asset management company based in a EU Member State, namely LGT Capital Management A.G. (based in Liechtenstein), was registered with the R.N.S.C. Public Register as company which may provide asset management services by way of the freedom to provide services. There were no corresponding requests for deregistration.
65
Romanian National Securities Commission Annual Report – 2012
Consequently, as of 31.12.2012, ten asset management companies from other EU Member States which may provide asset management services in Romania were registered with the R.N.S.C. Public Register, nine of which may provide such services directly, by way of the freedom to provide services, while one such company may provide asset management services by way of the freedom of establishment (i.e. through a branch).
IV. UCITS from other EU Member States The year 2012 marked a series of amendments to the documents of several undertakings for collective investment in transferable securities marketed in Romania (due to mergers, changes of business names, changes of investment policies, the conclusion of new distribution agreements). There was no request for the registration of UCITS from other EU Member States. Following the notifications received, R.N.S.C. has registered 10 new sub-funds of the Pioneer Funds, which are already registered with the R.N.S.C. Public Register. R.N.S.C. has also deleted Raiffeisen - Euro Corporates and Raiffeisen - A.R. Global Balanced, from the “Open-end investment funds from other EU Member States in line with European Directives” section of the R.N.S.C. Public Register, due to cessation of distribution business in Romania. As of 31.12.2012, 29 UCITS from other EU Member States, namely three investment firms and 26 open-end investment funds (see Annex 14) were registered with the R.N.S.C. Public Register versus 31 UCITS registered with the same Register as of 31.12.2011.
66
II. THE ROMANIAN CAPITAL MARKET
Romanian National Securities Commission Annual Report – 2012
1. DEVELOPMENTS In the context of the international economic crisis, the main European and international market indexes recorded negative annual variations of closing values, due to falling investor confidence levels on regional and international stock exchanges. While the 2011 year-end marked a 30% fall in regional and international indexes, 2012 was the year of significant market corrections, with significant catch-up potential for European market indexes. While risk tolerance was up due to the impact of the monetary policies pursued by central banks, capital markets in the Eurozone and the U.S.A. have recovered significantly in 2012,indicating that investors have not been discouraged by the negative outlook on overall macroeconomic data. From mid May 2012 to end November 2012, stock market indexes have gone up in most European countries and the U.S. The price of securities in the U.S. has reached the record levels of 2006, driven by the growth of securities issued by financial investment companies. In 2012, the market closed with an overall optimistic outlook, translated into the significant boom on the equity market, especially in December 2012. The short-term economic performance of European financial markets closely followed the successful resolution of the sovereign debt crisis in Italy, Portugal and Greece. Regulated market index levels in Romania showed the significant impact of the international financial and economic context and developments on the domestic capital market. The evolution of the BET index in the period 2008-2012 versus the evolution of the main European and international stock market indexes is shown in Figure 8 below.
Long-term evolution of main international stock market indexes in the period 2008-2012 (%)
Source: B.S.E. Figure 8 The positive outlook on the future of the Eurozone has mainly influenced the German DAX index, with a positive variation of 30% and had a positive impact
69
Romanian National Securities Commission Annual Report – 2012 on most European stock market indexes. The trend set by the DAX index was also followed by stock market indexes in Central Europe, with WIG20 - the most representative stock market index in the region - going up 21% in the year.
Short-term evolution of main international stock market indexes (%)
Source: B.S.E. Figure 9
As a reaction to the historically low key interest rates maintained by the Federal Reserve System, the launching of two new Quantitative Easing programmes by the Fed, the maintenance by the National Bank of Switzerland of a record low exchange rate for the Swiss franc and the below-1% key interest rate announced by the European Central Bank, investor confidence has picked up and international stock market indexes have resumed on an upward trend.
Eurozone market indexes have gone up 13% in H2 2012 versus H1 of the same year, in contrast to stock market indexes in Japan and the U.S. that posted only moderate growth rates of 4% and 7%, respectively.
In the context of improved investor confidence levels on the Romanian capital market, most quotes have gone up significantly in 2012. Thus, by 2012 year-end, BET 8 has gone up 18.67%, BET-FI 31.19%, BET-C 6.28%, and ROTX 29.09%.
BET-XT and BET-NG also had significantly higher closing prices, i.e. by 19.22%, and 2.61% respectively. In April 2012, B.S.E. has approved a new BET index, namely BET Benchmark (BET-BK). BET-BK is calculated as the price-weighted free float of the most frequently traded companies listed on the B.S.E. regulated market; in 2012, the BET-BK index closed at 1,053.46. The short-term evolution of main B.S.E. indexes is shown in Figure 10 below.
8 Index variation was based on closing prices denominated in RON. 70
Romanian National Securities Commission Annual Report – 2012
Short-term evolution of main B.S.E. indexes (%)
Source: R.N.S.C.
* Variation (%) calculated on a fixed 100 basis.
Figure 10 The main B.S.E. indexes have recovered the losses from the previous year and reached levels close to 2010 year-end. The medium-term evolution of main B.S.E. indexes is shown in Figure 11 below.
Medium-term evolution of main B.S.E. indexes (%)
Source: R.N.S.C.
* Variation (%) calculated on a fixed 100 basis.
Figure 11 In 2012, investors showed heightened interest in trading on the B.S.E. regulated market, particularly in H2 2012, and consequently, the market recovered the losses from the previous year. As shown in Figure 12 below, B.S.E.’s liquidity ratios in the past two years indicate improved investor appetite both at national and international levels.
71
Romanian National Securities Commission Annual Report – 2012
Evolution of B.S.E. liquidity ratios in the period 2011-2012
No. of transactions Volume
Source: R.N.S.C. Figure 12 The significantly low level of investor interest in the shares of the issuers listed on the RASDAQ market was obvious in the second consecutive drop in the Raq-I and Raq-II indexes, which went down by 81.34%, and 11.21% respectively. The RASDAQ-C composite index was down a moderate 10.46%. The evolution of RASDAQ indexes in 2012 is shown in Figure 13 below.
Evolution of RASDAQ indexes in 2012 (%) Volume
Source: R.N.S.C.
* Variation (%) calculated on a fixed 100 basis (100 = 01.01.2012).
Figure 13 The major changes in the levels of RASDAQ indexes were triggered by the low liquidity levels due to the lack of investor interest in the shares of issuers listed on this particular stock market section.
72
Romanian National Securities Commission Annual Report – 2012
While 2011 was a year of significant drop in the main B.S.E. indexes, 2012 was a year of resumed growth rates. For instance, the BET-FI index, which shows the overall trend in the prices of S.I.F. shares traded on the B.S.E. regulated market was the highest achiever of 2012, with an increase of 31.19%. The evolution of B.S.E. and RASDAQ indexes in 2012 is shown in Table 21 below. Evolution of B.S.E. and RASDAQ indexes in 2012
Table 21 B.S.E. and RASDAQ Closing value as of Closing value as of Variation in 2012 (%) indexes 31.12.2011 (points) 28.12.2012(points) BET 4,336.95 5,146.96 18.67% BET-C 2,621.41 2,786.11 6.28% BET-FI 19,341.50 25,375.38 31.19% ROTX 8,038.92 10,377.42 29.09% BET-XT 405.62 486.44 19.92% BET-NG 612.35 628.34 2.61% BET-BK 0 1,053.46 - RASDAQ-C 1,580.08 1,414.79 -10.46% RAQ-I 908.83 169.50 -81.34% RAQ-II 1,991.98 1,768.60 -11.21%
Source: B.S.E. As a consequence of higher securities prices, the capitalisation of B.S.E. operated markets as of 2012 year-end was RON 106.60 bn. (EUR 24.06 bn.) - 31.58% up from the RON 81.01 bn. (EUR 18.75 bn.) market capitalisation as of 2011 year-end. Stock market capitalisation to G.D.P. in the period 2008-2012 is shown in Figure 14 below. Stock market capitalisation to G.D.P. was 18.15% as of 2012 year-end.
Stock market capitalisation to G.D.P. in the period 2008-2012
Figures 2008 2009 2010 2011 2012
G.D.P. 503.96 497.46 512.18 568.09 587.46 (RON bn.)
Market capitalisation 57.80 92.40 113.27 81.01 106.60 (RON bn.)
Stock market capitalisation 11.47 18.57 22.12 14.26 18.15 to G.D.P. (%)
Source: B.S.E./N.I.S. Figure 14
Trading value on the spot markets operated by B.S.E. reached RON 7.43 bn. - i.e. EUR 1.67 bn. - as of 2012 year-end, versus RON 9.93 bn. - i.e. EUR 2.34 bn. - as of 2011 year-end. 73
Romanian National Securities Commission Annual Report – 2012
Derivatives trading on B.S.E. amounted to RON 40.21 m., i.e. 60.96% of the RON 103.01 m. in trading in 2011. The capitalisation of SIBEX-operated markets reached RON 64.40 m. (EUR 14.53 m.) while trading values amounted to RON 14.69 bn. (EUR 3.30 m.). The volume of futures and options trading on SIBEX-operated markets reached 1,473,356 contracts as of 2012 year-end, 153,218 less than in the previous year, hitting five-year record low figures. As in the previous years, investors showed interest in the shares issued by undertakings for collective investment due to lower risk levels compared with other categories of financial instruments. Investment funds were on the same upward trend recorded in the past three years, reaching record high figures as regards the net assets managed by collective investment undertakings. Thus, net asset value went up from RON 7.04 bn. in 2011 to RON 9.23 bn. in 2012.
74
Romanian National Securities Commission Annual Report – 2012
2. REGULATED MARKETS
2.1. THE BUCHAREST STOCK EXCHANGE
The Bucharest Stock Exchange (B.S.E.) (ro. S.C. Bursa de Valori Bucureşti S.A. (B.V.B.)) operates one regulated spot market, one regulated forward market, a market section known as RASDAQ, plus an alternative trading system. Trading is performed through an electronic system - Arena - where the orders placed by authorised brokers are received and transactions are executed on the B.S.E.-operated markets.
The equity market In 2012, B.S.E. was less influenced by the individual performance of listed companies, the developments of macroeconomic indicators or the political decisions of governments, but was heavily impacted by the statements and actions of central banks.
The aggregate trading value amounted to RON 9.34 bn.9, comprising: debt securities (RON 1,181.11 m.), futures contracts (RON 40.21 m.), rights (RON 2.5), shares (RON 7,429.14 m.), structured products (RON 687.33 m.), and fund units (RON 4.92 m.). Trading in the shares of the five financial investment companies (ro. S.I.F.) accounted for 23.49% of total trading on B.S.E.’s equity market. The structure of B.S.E. trading in 2012 is shown in Figure 15 below.
Structure of B.S.E. trading in 2012
Source: B.S.E. Figure 15
By the end of 2012, B.S.E. market capitalisation has gone up a significant 38.06% to RON 97.72 bn. versus RON 70.78 bn. by the end of 2011. The previous year marked the admission to trading of the shares issued by S.C. Fondul Proprietatea S.A. (F.P.), through the system of omnibus accounts and mechanism without securities pre-validation. In 2012, trading in F.P. shares accounted for approximately 43% of aggregate trading in shares and fund units on the B.S.E.
9 Average EUR/RON exchange rate in 2012: 4.45. 75
Romanian National Securities Commission Annual Report – 2012 regulated market. Starting with 01.02.2012, the system of omnibus accounts and the mechanism without securities pre-validation have been extended to all the securities subject to trading on the regulated spot market operated by B.S.E.
As regards trading values, the shares issued by Fondul Proprietatea rank first with a total value of RON 3.21 bn., followed by the shares of BRD - Groupe Societe Generale - RON 546 m., S.I.F. Transilvania - RON 516 m., OMV Petrom S.A. - RON 508 m. and S.I.F. Oltenia - RON 433 m. Fondul Proprietatea has managed to maintain its leader position with respect to trading volumes as well: approximately 6.16 billion shares, followed by OMV Petrom (SNP), Rompetrol Rafinare S.A. (RRC), S.I.F. Transilvania (SIF3) and Concefa S.A. Sibiu (COFI).
A number of public offerings have been carried out through B.S.E. (including special sales to order) resulting in: 7,255 transactions (versus 1,515 in 2011), an aggregate trading volume of more than 122.8 million shares (versus 37.7 million in 2011) and a value exceeding RON 661 m. (versus 137 m. in 2011). While in the previous year, average daily volumes traded on the B.S.E. regulated market went up significantly, in 2012 the same volumes went down by approximately 23.66% to an average RON 29.74 m. versus an average RON 38.96 m. in the previous year. The average number of transactions/trading session has dropped from 3,530 transactions in 2011 to 2,951 transactions in 2012. The evolution of B.S.E. market capitalisation and average daily trading value in the period 2008-2012 is shown in Figure 16 below.
Evolution of B.S.E. market capitalisation and average daily trading value in th