There are 50 brokerage firms operating on the Bucharest Stock Exchange, but the top ten account for 74% of the stock trading volume. At present brokers pay a total fee of 0.162% of the value of stock transactions to the stock exchange.
The proposal, to be put to shareholders’ vote on March 13, has caused major disputes and divided brokers into two camps: on the one hand there are those who uphold the new fees because in this way the stock exchange no longer subsidizes the activity of small brokers and encourages major brokerages, which account for almost 80% of the stock exchange volumes. On the other side are those who fear that the new fees will lead to the disappearance of small brokers, which have been significantly affected by the crisis and which cannot afford to pay a fixed monthly fee.
A brokerage firm with monthly transactions of RON1 million collects fee revenues of around RON5,000 (a 0.5% fee) and if it paid this monthly fee to the stock exchange, it would be left with RON1,500 for the payment of wages and utilities. In order to be able to afford the fee, a brokerage needs to conduct transactions of at least RON3 million. At present 12 out of the 50 firms have monthly volumes of under RON3 million.
The proposed fee cuts for variable fees on stock transactions are of up to 20%, and of up to 10% for transactions involving structured products.
Rares Nilas, general manager of BT Securities brokerage, the fifth largest broker on the market, agrees with the new fee plan.
“All stock exchanges in the region, in Vienna, Warsaw and Frankfurt have the same approach. Large brokers are stimulated to conduct major transactions by cutting variable fees. We must not forget that in 2012 two major brokers – ING and UniCredit CA IB Securities – withdrew from the Bucharest stock exchange because they deemed their local activity no longer profitable.”
On the other hand, Lucian Isac, general manager of brokerage Estinvest, no. 19 on the market, says the new fees are a measure that will have a negative impact on the development of the market because it will lead to the disappearance of brokerages that work with small clients.
The stock exchange proposes the introduction of the new fees as of July 1, 2013 or January 1, 2014.
(English version by Daniela Stoican)