Financial Supervisory Authority’s proposals to update the capital market legislation

UniCredit Bank S.A.
Fri, 22/03/2024

FSA’s consultation meetings resulted in several amendments

At the beginning of February, the Financial Supervisory Authority (FSA) organized a series of consultations, attended by representatives of the capital market infrastructure. These meetings aimed to make proposals on the normative framework for amending and supplementing specific legislation, which is a part of the FSA strategy regarding the process of continuously updating and improving capital market legislation.

The amendments focus on the improvement of investor protection, in alignment with European legislation, which is itself in continuous transformation, plus updates of legislation according to circumstances which have arisen in practice, and lastly focusing on better efficiencies of operations carried out in the capital market.

The FSA proposed a list of norms in scope, out of which the following are the most important:

• The GEO no. 32/2012 regarding collective investment bodies in securities and asset management companies, as well as the amendment and completion of Law no. 297/2004 regarding the capital market, with subsequent amendments and additions;

• Law no. 74/2015 on the administrators of alternative investment funds, with amendments and subsequent additions;

• Law no. 24/2017 on issuers of financial instruments and market operations, republished, with subsequent amendments;

• Law no. 126/2018 on financial instruments markets, with amendments and additions subsequent;

• Law no. 243/2019 on the regulation of alternative investment funds and for the modification and completion of some normative acts, with subsequent modifications and additions;

• Law no. 88/2021 regarding the Investor Compensation Fund

Further updates:

  • The Bucharest Stock Exchange (BSE) had its best year in history in 2023. Multiple records at the BSE in 2023 include the highest market value of all listed companies, with over RON 300 billion and total transactions of RON 38 billion. Indices also saw historical highs, and the total number of investors reached 178,000, another substantial record for the market. In 2023, the Bucharest Stock Exchange also hosted the largest initial public offering (IPO) in Europe: RON 9.3 billion (EUR 1.8 billion) through the listing of 20% of Hidroelectrica.
  • The start of 2024 has also seen new all-time highs for the Romanian stock market. Underlining this positive sentiment, the main index, BET (Bucharest Exchange Trading), reached a new all-time high in January, after three months of consecutive positive development.
  • The Board of Directors of the National Bank of Romania (NBR) decided, during a February meeting, to maintain its monetary policy interest rate at the level of 7% p.a. The key interest rate has been unchanged since January 2023.
  • The representation of the Romanian equity market in MSCI indices increased with the inclusion of four new companies, all listed on the Bucharest Stock Exchange. Romania, classified as a frontier market by MSCI, now has, since March 1, 2024, 26 listed companies included in MSCI’s frontier indices. FTSE Russell, on the other hand, has classified Romania as an emerging market, and includes 13 companies in its global indices..
  • In February 2024, Romania launched its first issue of green bonds, a long-awaited measure aimed at diversifying the investor base in the context of growing demand for these types of investments. Romania already has several renewable energy projects lined up to benefit from EU funding and will use the green bond framework to finance projects in the field of green transport, improving the energy efficiency of buildings and reforestation, amongst other measures.