Romanian govt passes ordinance reforming capital market law

The amendments will facilitate investors' access to the local capital market and will ensure that their rights to vote and dividends are respected, among others, the government said on its website last week.

The Bucharest Stock Exchange, BVB, is currently classified as a frontier bourse, like its peers in Tunisia, Ukraine, Argentina and Bangladesh. An upgrade would trigger significant inflows of funds from passive vehicles which track emerging markets.

Commenting on the move, Raiffeisen Bank Romania said in a note to investors on Monday it rates the news as positive for the share price of the Bucharest Stock Exchange, as it is a clear step forward towards achieving an upgrade to emerging markets status.

The bank also said the ordinance increases the ownership threshold in BVB and other market operators from 5.0% to 20%. Also, for a share capital increase in-kind or with cash when waiving rights of shareholders, the decision may be taken only in an extraordinary general shareholders' meeting having a quorum higher than 75% of subscribed capital but with votes representing two thirds of voting rights.

Romania's financial supervision authority, ASF, approved in August an action plan aimed at upgrading BVB with a view to receiving an emerging market status. The set of actions towards establishing and acknowledging the emerging market status, or STEAM, approved by the ASF, envisages a programme for the vigorous reform of the local capital market in terms of size, liquidity and accessibility, and is scheduled to be completed by the end of 2015.

The goal of the programme is for BVB to secure emerging market status within two years from its debut, namely being included in the MSCI Emerging Market Index, created by Morgan Stanley Capital International (MSCI). The index is designed to measure equity market performance in global emerging markets.

Romania is currently included in the MSCI Frontier Markets Index, which tracks the stock markets of countries which are even more volatile than emerging markets.