"I want to stay involved in the Central Counterparty project”

Reporter: You are at the end of your mandate as general manager. Remus Vulpescu is next.

Adrian Tănase: Yes. From July 1, Mr. Vulpescu will be the new general manager of BVB.

Reporter: Will there be a handover-receipt of the mandate?

Adrian Tănase: There will be, but there is no 100% continuity scenario. Maybe Mr. Vulpescu has a different opinion related to certain directions. If we were in a 100% continuity scenario, I would have remained in office.

Reporter: What will you do in the future?

Adrian Tănase: I will remain, for now, on the board of CCP.RO Bucharest where I currently hold the position of president and I want to remain involved in this project, which I consider the most important for the development of BVB. My career has developed in the capital market, I will continue in the capital market; regardless of what position I will be in, within the BVB Group or outside this institution, my interest remains the same, for the stock exchange to develop.

• "The only solution to increase liquidity on the Stock Exchange is the operationalization of the Central Counterparty"

Reporter: The Central Counterparty is a sore point of your mandate. It is a delay in meeting the established deadlines.

Adrian Tănase: I would not say that it is a sore point. Certain things have happened that have created frustration, but at the moment I have hopes that this institution will be operationalized in a reasonable time.

Reporter: Why did it take so long? The Central Counterparty is a software thing.

Adrian Tănase: The Central Counterparty is, first of all, a matter related to the management of guarantees, but, indeed, a software issue generated this delay, especially in 2024 when Euronext withdrew from the contract. This generated a change in set-up that took longer to implement. We are implemented with this change in functional set-up in the technological area.

Reporter: Why did Euronext withdraw?

Adrian Tănase: Because it had other strategic directions. We will operate under their license, of the software that they will offer us. We have gone over that change, we are working on the file to finalize it 100%.

Reporter: What do we hope for when the Central Counterparty becomes operational?

Adrian Tănase: I have said it all the time, the only solution to increase liquidity on the Stock Exchange is to operationalize this institution, I don't see any other, of course, having in the background a primary market that also becomes very active. Liquidity must be created from the possibility of trading multiple strategies. First of all, we want to relaunch the markets for derivative financial instruments on the BVB, for futures contracts. Having such instruments at our disposal, we will increase the range of transactions that you can make on the stock exchange or strategies that you can implement on the stock exchange and this will generate greater liquidity. In the future, there will be other types of instruments. We want to implement or facilitate lending-borrowing operations on stocks, to have a more attractive market for market-makers or a market that can facilitate short-selling operations. All these things lead to liquidity.

• "Liquidity has a rather flattish trend, if not downtrend"

Reporter: What is the proportion of population participation in the capital market that would be optimal for our size?

Adrian Tănase: I say that the market needs to have a different size to be optimal for the caliber of participants. It is clear that our investor community - including institutional investors, local and foreign - is much stronger than the size of the market. They need a larger market, that is, a market with more listed companies.

Reporter: Isn't it a much larger market compared to the number of investors we have?

Adrian Tănase: Far from this opinion. If we look at liquidity, look at the evolution of Hidroelectrica's liquidity. That is, the fact that the free-float has consolidated so quickly is proof that the market is undersized compared to the purchasing power or the investment need of investors in the market. The pace at which the free-float of Romanian companies is consolidating is one that tells me that the market needs many more issues.

Reporter: Hidroelectrica is not the image of this ensemble.

Adrian Tănase: Let's take the general dimension then. If we look at the evolution of stock market capitalization versus the evolution of liquidity. We see that liquidity has had a rather flattish trend (ed. - towards a flat form) for a very long time, if not even downward if we go back to 2007-2008, while stock market capitalization has increased significantly. It's clear.

Reporter: How many companies, how many issuers do we have on the BVB? Are they traded daily?

Adrian Tănase: 85 issuers. Many are not traded daily

Reporter: In percentage terms, how many issuers are usually traded?

Adrian Tănase: Three issuers make up 60% of the total volume. Only 20 issuers trade over 1% of the total volume.

Reporter: That's only 25%. The other 75% represents the breadth of the market.

Adrian Tănase: No. I think their size and other considerations cannot be taken into account for the massive improvement of liquidity.

Reporter: Is it about the quality of the goods?

Adrian Tănase: Yes, and this is an aspect. Quality, quantity, everything is analyzed. Then the buy and hold strategy also intervenes in the market, a strategy that is specific to a good part of the investors who operate on our stock exchange. We need to attract other types of investors, with other strategies, by launching derivatives markets.

Reporter: I remember that in the past the Budapest Stock Exchange performed with 10 issuers. And it was breaking trading records.

Adrian Tănase: Well, even now the Budapest Stock Exchange has better liquidity than us with a few issuers that are traded daily, really. But I think that Romania is actually in a better position with a stronger local investor community than the Budapest Stock Exchange and with a much better diversification of listed issuers. But they have CCP.

Reporter: That's why I maintain my opinion that the product is enough, only the marketing is deficient.

Adrian Tănase: How easy it would be! I am convinced that we do not have enough product for the caliber of our investors and it is not a marketing problem. That is why, in the future, the primary market must continue to develop and deals must be generated - from my point of view, the focus must be on generating deals - for investors who are already in the market. Another focus should be on increasing liquidity through the Central Counterparty.

Reporter: How much do the population's savings amount to in the banking system?

Adrian Tănase: The value of the population's bank deposits is 77 billion euros. I believe that attracting capital, even a part, even 10% of these savings, should be accompanied by IPOs.

• Intermediaries that can bring new companies to the BVB - an essential element for the development of the capital market

Reporter: Why aren't IPOs made?

Adrian Tănase: IPOs don't happen constantly. There are also market conditions, there have been certain situations. They will happen, there are all the premises for this. We have a strategy for developing the capital market, we have the prospect that the government will return with companies from the state portfolio to the market, but also with additional packages, we have more and more Romanians who invest and the trend is maintained, we have a regulatory framework that is improving.

Reporter: It doesn't happen constantly, but there is an annual average.

Adrian Tănase: We don't have a history in this regard. The first year when we had a lot of activity was 2021, when we had 23 listings. After that came the crisis generated by inflation and the price of energy due to the conflict in Ukraine, and then various specific Romanian, political problems intervened, which we still have, to which are added risks and macroeconomic uncertainty in the short term. I say that when all these important events, which can greatly damage the sentiment in the primary market, dissipate and we have normal conditions, I am convinced that we will have a reactivated primary market.

Reporter: I think that the capital market did not do enough by itself, not the government. I think that the capital market should have developed specific market segments such as for small businesses.

Adrian Tănase: We have AeRO which addresses exactly this type of companies. The acceleration of listings is also related to a change in the cultural and mental set-up among entrepreneurs.

Reporter: How is this done?

Adrian Tănase: It is done over time. I don't think this set-up can change from one month to the next. What happened in 2021 should make us optimistics. I hope that in the future, when we talk about changing the mindset of entrepreneurs, we will bring the activity of intermediaries (ed. - market-makers, brokers) in our country to the center of the discussion and put more emphasis on it. We need to give the necessary tools (ed. - necessary instruments) to these intermediaries, which has not happened so far, unfortunately. I think that intermediaries must be brought to the center of this discussion of the development of the BVB and the capital market, and this must happen as soon as possible. We must give brokers the necessary power to bring new companies to the market. Intermediaries must become the most important pillar of the development of the capital market.

Reporter: What do you consider to be the most representative achievement during your directorate?

Adrian Tănase: It is difficult for me to talk about my achievements. I could say what were the three most important events during my mandate: the listing of Hidroelectrica, the increase in the number of investors and the materialization of the partnership with the energy market within the CCP project where the second shareholder is OPCOM. I hope we will be able to make the most of this partnership, it will be significant for the stock exchange.

Reporter: Thank you.