Romania's new borrowing and lending rules take effect
02 August 2016 Bucharest
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A revised framework for borrowing and lending financial instruments admitted to trading at the Bucharest Stock Exchange takes effect from today.
The Bucharest Stock Exchange and Central Depository have implemented a “new and flexible” regulatory framework that will “allow investors to benefit of any market trend”. Both the Romanian Financial Supervisory Authority and the National Bank of Romania have approved the new rules.
“Short selling is an indispensable element of a developed capital market,” said Ludwik Sobolewski, CEO of the Bucharest Stock Exchange. “It creates new possibilities for the investors, protecting the value of the investments and giving a chance for gains resulting from intensive speculative trading.”
“Lending of financial instruments puts them at work generating new revenues for the lenders and ensuring the safety of the short selling for the market.”
Under the new framework, the short selling of any financial instrument admitted to trading at the Bucharest Stock Exchange is allowed, with no restriction on type of asset, price or minimum volume. Participants are also under no obligation to specifically mark short selling orders.
Participants no longer have to use a standard lending agreement and send it to the CSD, whose assets are now all available for borrowing and lending.
"The improved version of lending and borrowing of shares brings flexibility, meets market requests and ensures the necessary framework to increase liquidity, a requirement of the Romanian capital market which must be met to be upgraded to the emerging market status,” commented Silvia Buicanescu, CEO of the Central Depository.
Speaking at a Bucharest Stock Exchange seminar in July, Sobolewski pinpointed the ability of short selling to increase the attractiveness of market making, “which is essential for the better velocity of the market in equities”.
“Much larger exchanges than the Bucharest Stock Exchange would have a problem of the depth and liquidity of the market if they had not have liquidity providers. In this context, it is of paramount importance that the Financial Supervision Authority decided to eliminate the fees of the regulator that were imposed on transactions executed by market makers.”
Florentina Boboc, a director at the Financial Supervision Authority, added: “We are very satisfied that the legislative package regarding the borrowing and lending activity has been finalised. Now comes the next stage, which is turning the regulations into market practice. We will be observing this process with great interest.”
The Bucharest Stock Exchange and Central Depository have implemented a “new and flexible” regulatory framework that will “allow investors to benefit of any market trend”. Both the Romanian Financial Supervisory Authority and the National Bank of Romania have approved the new rules.
“Short selling is an indispensable element of a developed capital market,” said Ludwik Sobolewski, CEO of the Bucharest Stock Exchange. “It creates new possibilities for the investors, protecting the value of the investments and giving a chance for gains resulting from intensive speculative trading.”
“Lending of financial instruments puts them at work generating new revenues for the lenders and ensuring the safety of the short selling for the market.”
Under the new framework, the short selling of any financial instrument admitted to trading at the Bucharest Stock Exchange is allowed, with no restriction on type of asset, price or minimum volume. Participants are also under no obligation to specifically mark short selling orders.
Participants no longer have to use a standard lending agreement and send it to the CSD, whose assets are now all available for borrowing and lending.
"The improved version of lending and borrowing of shares brings flexibility, meets market requests and ensures the necessary framework to increase liquidity, a requirement of the Romanian capital market which must be met to be upgraded to the emerging market status,” commented Silvia Buicanescu, CEO of the Central Depository.
Speaking at a Bucharest Stock Exchange seminar in July, Sobolewski pinpointed the ability of short selling to increase the attractiveness of market making, “which is essential for the better velocity of the market in equities”.
“Much larger exchanges than the Bucharest Stock Exchange would have a problem of the depth and liquidity of the market if they had not have liquidity providers. In this context, it is of paramount importance that the Financial Supervision Authority decided to eliminate the fees of the regulator that were imposed on transactions executed by market makers.”
Florentina Boboc, a director at the Financial Supervision Authority, added: “We are very satisfied that the legislative package regarding the borrowing and lending activity has been finalised. Now comes the next stage, which is turning the regulations into market practice. We will be observing this process with great interest.”
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