BUCHAREST STOCK EXCHANGEBUCHAREST STOCK EXCHANGE

BRIEF HISTORYBRIEF HISTORY

July 1, 1881 July 1, 1881 “Law on exchanges, securities, and commodities brokers” was adopted after the French model

December 1, 1882 December 1, 1882 Bucharest Exchange was established under Royal Decree, upon the initiative of bankers and merchants First instruments traded First instruments traded 6 shares and 15 fixed-income securities

1934 - 19451934 - 1945

56 companies listed (mining, banking petroleum industries)

some of the listed companies were also traded on European markets (Paris, Anvers, Frankfurt, Amsterdam, Basel, Zurich, etc) 77 government and corporate bonds

1948 1948 Bucharest Exchange was closed due to the communist regime coming into power

Chamber of Commerce and Industry building that housed the Bucharest Exchange during 1911 - 1948

REOPENING OF THE EXCHANGEREOPENING OF THE EXCHANGE

ESTABLISHMENTESTABLISHMENT

April 21, 1995 April 21, 1995 Bucharest Stock Exchange was reopened after almost 50

years since closing down of the Bucharest Exchange - “Law no. 52/1994 on securities and stock exchanges”

- assistance granted by the Romanian and Canadian governments, National Bank of Romania, and Know How Fund

20 November 20, 199520 November 20, 1995 - first trading session - 24 founding members - 9 listed companies - fully electronic environment: automated trading system (A.T.E.S.) clearing-settlement and registry system (C.D.S.)

PURPOSEPURPOSE

since its reopening in 1995, BSE’s main purpose has been to provide efficient and transparent market mechanisms for trading in securities issued by major Romanian and international companies, investment funds, Government and local authorities

BSE CORPORATE STRUCTUREBSE CORPORATE STRUCTURE

ORGANIZATIONORGANIZATION

For- profit stock corporationFor- profit stock corporation January 10, 2005: BSE Association decided upon changing the legal status from an institution of public interest into a for-profit stock corporation

the share capital is equally divided among the 67 former member firms

BSE’s share capital of ROL 205,750,300,000 (face value of ROL 100,000)

BSE set up The Corporate BSE set up The Corporate Governance InstituteGovernance Institute BSE and BER merged into a single BSE and BER merged into a single entityentity November 30, 2005: BSE and BER shareholders approved the merger document.

In April 2003, BSE moved to a new location in the International Business Center Modern

ROMANIAN STOCK MARKET IN 2005ROMANIAN STOCK MARKET IN 2005

BUCHAREST STOCK EXCHANGE (BSE)

RASDAQMARKET (BER)

BSE ELECTRONIC PLATFORM

LISTEDCOMPANIES

TRADEDCOMPANIES

BSE & BER COOPERATION

UNLISTEDCOMPANIES

RegularOrder driven

DEALQuote driven

ODD LOT

Order driven Dealing

BERMost traded companies

Clearing&Settlement: BSE DepartmentBSE Department

Order driven

ROMANIAN STOCK MARKET: FUTUREROMANIAN STOCK MARKET: FUTURE

BUCHAREST STOCK EXCHANGE- Market operator -

BSEALTERNATIV

TRADING SYSTEM(ATS)

BSE REGULATED MARKET(OFFICIAL MARKET)

SPOT MARKET DERIVATIVE MARKET

SECTOR ASECTOR AMAIN MARKET

SECTOR BSECTOR BPARALLEL MARKET

SECTOR CSECTOR CNEW MARKET

SECTOR DSECTOR DFUNDS

SECTOR ESECTOR EBONDS ISSUED

BY PUBLIC ENTITIES

SECTOR FSECTOR FINTERNATIONAL

SECTOR

EQUITIES

BONDS

RIGHTS

EQUITIES

BONDS

RIGHTS

EQUITIES

BONDS

EQUITIES

UCITS

MUNICIPAL BONDS

GOVERNMENT BONDS

EQUITIES

BONDS

BUCHAREST STOCK EXCHANGEBUCHAREST STOCK EXCHANGE

• BSE’s main purpose is to provide an efficient and transparent market mechanism for trading in securities issued by major Romanian companies, Government and local authorities.

• Since BSE’s reopening in 1995, market operations have been conducted within a dematerialized environment, through fully electronic systems, in accordance with the international standards.

• Services delivered by BSE:– traditional services: trading, listing, data dissemination.– clearing and settlement through a special department

organized by BSE.– registry services.

BSE LISTINGBSE LISTING

• LISTED SECURITIESLISTED SECURITIES 3 sectors:

“Securities issued by Romanian legal entities” - TIER I - large and competitive companies (20 common stocks)

- TIER II (“base tier”) - medium size companies (44 common stocks)

- TRANSPARENCY TIER (“PLUS tier”) - companies from both tiers adhering to the BSE’s Corporate Governance Code (1 common stock)

“Bonds and other debt securities issued by the State, central and local administration, and by other public authorities and companies”

- municipal & corporate bonds (outstanding issues: 21)

“International Sector” - securities issued by foreign legal entities (no listings yet)

• UNLISTED SECURITIESUNLISTED SECURITIES “Traded but not listed companies” (42 common stocks)

TRADING TRADING

• MARKET INSTRUMENTS:MARKET INSTRUMENTS:– shares;

– municipal and corporate bonds;

– rights.

• REMOTE TRADINGREMOTE TRADING:

- fully dematerialized environment;

- electronic negotiation and confirmation of trades;

- trading is done through the market intermediaries’ (SSIF) terminals locate in their offices

• EFFICIENT PRICE DISCOVERYEFFICIENT PRICE DISCOVERY MECHANISM:MECHANISM:- order-driven and quote-driven;- full audit trail of orders and trades;- on-line trading information and statistics;- market surveillance tools;- flexibility in implementation of new market rules and financial instruments.

CLEARING & SETTLEMENT CLEARING & SETTLEMENT

• MAIN CHARACTERISTICS:MAIN CHARACTERISTICS:

– Rolling settlement cycle: T+3;

– Delivery Versus Payment (DVP);

– BIS model 2: net settlement for money & gross settlement for securities;

• PARTICIPANTS TO THE SETTLEMENT PROCESSPARTICIPANTS TO THE SETTLEMENT PROCESS:

- brokerage companies;

- custodians;

- settlement banks;

- Romanian National Bank (NBR)• 100% OF SETTLED TRANSACTIONS:100% OF SETTLED TRANSACTIONS:

– no failure to the settlement.

• COST EFFECTIVE:COST EFFECTIVE:– no specific fees for clearing and settlement

BSE: INFORMATION DISEMINATIONBSE: INFORMATION DISEMINATION

NEWS AGENCIES

BROKERSINTERNET

MEDIAISSUERS

BSE REGISTRYBSE REGISTRY

• REGISTRY STRUCTUREREGISTRY STRUCTURE– Section I: beneficial owner accounts opened by BSE for natural and legal persons.

The securities kept in accounts opened in this section are not subject to trading;

– Section II: beneficial owner accounts opened with brokerage houses/custodians by natural and legal persons that are clients;

– Section III: beneficial owner accounts opened by brokerage houses/custodians for their own account, when acting as principal.

• REAL TIME LINK BETWEEN EXCHANGE OPERATIONSREAL TIME LINK BETWEEN EXCHANGE OPERATIONS:

- trading system clearing-settlement & registry system;

- update of the securities holdings for each individual or nominee accounts;

- access to the consolidated list of holders of securities in BSE’s registry

• BSE SHALL EXTERNALIZE SETTLEMENT&REGISTRY SERVICES IN THE NEXT FEW MONTHS TO THE NEW CENTRAL SECURITIES DEPOSITORY

BSE ELECTRONIC SYSTEMSBSE ELECTRONIC SYSTEMS

• MARKET OPERATIONSMARKET OPERATIONS since BSE’s reopening in 1995, market operations have been conducted

within a dematerialized environment, through fully electronic systems, in accordance with the international standards

• CURRENT ELECTRONIC SYSTEMCURRENT ELECTRONIC SYSTEM

ARENA - Automated Exchange PlatformTM implemented in-house by the BSE experts:

shares

fixed income securities

Note: Note: As of March 14, 2005March 14, 2005, trading in all securities listed at the BSE is performed only through the ARENAARENA electronic platform, thus discontinuing the market operations the HORIZON & EQUATOR systems previously employed for common stocks

BSE: MARKET INDICATORSBSE: MARKET INDICATORS

80 46 570307

312445 1,383

2,6232,964

8,819

15,311

0

2000

4000

6000

8000

10000

12000

14000

16000

mln

. EUR

MARKET CAPITALIZATION

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

152 46

1,162

725332

371601

9011,115

2,363

8,712

0

1000

2000

3000

4000

5000

6000

7000

8000

ths.

EUR

TURNOVER- daily average -

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20052005

• Total capitalization and liquidity increased, but the market concentration remained high (both on turnover and capitalization).

BSE INDICESBSE INDICES

05

101520253035404550556065707580859095

100105110115120125130 %

05101520253035404550556065707580859095100105110115120125130%

BET BET-C BET-FI

2002 Ian Feb Mar Apr Mai Iun Iul Aug Sep Oct Nov Dec

2004 2005*

BSE indices in 2005:• BET: +51%;• BET-C: +38%;• BET-FI: +176%

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

180 %

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

180%

BET BET-C BET-FI

2002 Ian Feb Mar Apr Mai Iun Iul Aug Sep Oct Nov

INVESTORS ON THE BSEINVESTORS ON THE BSE

BSE investors structure in 2004

BSE investors structure in 2005

Persoane_juridice (rezidenti)

22%

Persoane_juridice (nerezidenti)

22%

Persoane_fizice (nerezidenti)

5%

Persoane_fizice (rezidenti)

51%

Persoane_juridice (rezidenti)

20%

Persoane_juridice (nerezidenti)

20%

Persoane_fizice (nerezidenti)

5%

Persoane_fizice (rezidenti)

55%

-

50

100

150

200

250

2000 2001 2002 2003 2004 2005*

M ontl y aver age tur nover

( doubl e c ounted)

Pers_fiz_rez. Pers_jurid_rez. Pers_fiz_nerez. Pers_jurid_nerez.

BSE IN FIGURES BSE IN FIGURES

Year

No. of T

radin

g Session

s

No. of T

rades

No. of S

hares T

raded

(volum

e)

Tu

rnover

Valu

e of Trad

es(E

UR

)

Cap

italization(E

UR

)

No. of C

omp

anies w

ith L

isted

Sh

ares

No. of N

ew L

istedC

omp

anies

No. of D

elisted C

omp

anies

No. of P

articipan

ts

No. of C

ustod

ian B

ank

s

1999 253 415,045 1,057,558,616 84,067,123 313,001,203 127 15 14 150 7

2000 251 496,887 1,806,587,265 93,244,168 450,512,639 114 1 14 120 7

2001 247 357,577 2,277,454,017 148,544,838 1,361,079,746 65 3 52 110 5

2002 247 689,184 4,085,123,289 222,426,577 2,646,438,376 65 1 1 75 6

2003 241 440,084 4,106,381,895 268,641,352 2,991,017,082 62 0 3 73 6

2004 253 644,839 13,007,587,776 598,072,158 8,818,832,158 60 3 5 67 6

2005 247 1,159,060 16,934,865,957 2,152,052,959 15,311,354,557 64 5 1 70 6

BSE INTERNATIONAL COOPERATION BSE INTERNATIONAL COOPERATION

MEMORANDUMS OF UNDERSTANDINGMEMORANDUMS OF UNDERSTANDING Athens Stock Exchange (1997)

Tokyo Stock Exchange (1999)

London Stock Exchange (2000)

Italian Exchange (2002)

Thessaloniki Stock Exchange Center (2003)

Wiener Börse AG (2004)

AFFILIATIONSAFFILIATIONS Member of the Central and Eastern Europe Central Securities Depositories and Clearing Houses Association (CEECSDA) - 1999

Correspondent Emerging Markets Member of the World Federation of Exchanges (WFE) - 1998

Correspondent Member the Federation of European Stock Exchanges (FESE) - 2002

Member of the Federation of Euro-Asian Stock Exchanges (FEAS) - 2003