FBiH Rulebook on Securities Intermediation Services Amendments

The Securities Commission of the Federation of BiH adopted Amendments to the Rulebook on Securities Intermediation Services. The most notable changes are as follows:

• Requirements for admission to stock exchange trading: In addition to meeting the requirements attributable to the free market segment, as defined by the legislation and the stock exchange rules, the issuers which are to be listed on the stock exchange must publish their latest financial reports in accordance with the bylaws of the Securities Commission.
• Trading with shares of closed-end companies: Trading with securities issued by closed-end companies (companies with share capital below BAM 4 million and number of shareholders below 40) is permitted by concluding trades off-exchange (previously such shares could be traded on the OTC market for debt securities).
• Trading with derivatives and short-term securities: Derivatives and short-term securities will be traded on the stock exchange using the continuous trading method in the way prescribed by the provisions of the Rulebook which regulate off-exchange trading (i.e. the OTC market, previously called OTC market for debt securities).
• Block transactions (off-exchange trading): The settlement of the so called block transactions (with value of at least BAM 500,000 and quantity of at least 5% of the capital of the issuer) will be executed through special purpose accounts of the professional intermediaries (i.e. the brokers) and the respective settlement amounts will not be included in the clearing and settlement performed at CSD level (previously it was defined that the settlement were to be performed through the CSD account opened at the Central Bank).
• Section "OTC market for debt securities" replaced by Section "OTC market": Money market instruments (Treasury bills issued by the Government, banks or other financial institutions; commercial bills; certificates of deposit issued by banks or other financial institutions) and financial derivatives can be traded on the OTC market. Debt securities issued by closed-end companies or limited liability companies can also be traded on the OTC market. Although it was previously planned that trading with Government bonds could be possible on the OTC market, they will continue being traded on-exchange only. OTC transactions are concluded using professional intermediaries (brokers) and are reported to the stock exchange in accordance with its rules. The transfer of the settlement amounts related to such OTC transactions is to be done using special purpose accounts of the professional intermediaries - such funds will not be included in the clearing and settlement performed at CSD level. It may be expected that the CSD will adopt shortly new acts providing further clarifications of the settlement procedures on the OTC market.

Impact on investors: The amendments, as described above, introduce clarifications to trading with certain types of instruments on the OTC market.

Related Newsflash: FBiH Rulebook on Securities Intermediation Services Amendments