The big fees represent one of the main hurdles to investors wanting to tap Romania, according to the authors of the report “Eight systemic barriers to the creation of a modern capital market in Romania.”
BVB applies trading fees that are as much as 10 times higher than those imposed on other markets in the region, reveals the report.
In absolute values, the gaps are widening with the value of transactions since many markets hold caps to fees paid per transaction. For instance, an investor buying and then selling shares worth 10 million lei (EUR2.1 million) pays fees of RON16,200 on the Bucharest bourse, while in Warsaw pays RON1,900 at the highest, in Prague RON1,280, in Budapest RON1,050 and in Vienna only RON802, according to ZF calculations based on data published in the report.
Fees levied by the supervision authority are also much higher than on other markets in the region, enhancing the perception the Romanian market is very expensive. ASF charges a fee of 0.08% in the value of transactions, so that in a RON10 million deal an investor has to pay RON8,000 to ASF (when buying only).
In the Czech Republic or Croatia, supervision authorities do not levy any fees for bourse transactions. In Poland, the supervision tax is included in the Warsaw bourse fee.
“I was a trader in the London City and from my experience I can say the main criteria an investor looks at when wanting to invest on a market are the average value of transactions and the trading cost. As regards the fees levied by brokers, we are quite competitive compared to foreign markets. However, when it comes to BVB and ASF fees, we are among the most expensive in the region,” said Cristian Micu, general manager of NBG Securities.
The Bucharest bourse being among the most expensive in the region does not come as a novelty. Nevertheless, neither BVB, nor ASF have changed their fees so far.
The solution proposed by the report authors is to gradually and permanently slash fees for trading and in the case of public offerings on the Romanian capital market, doubled by a cut in fees levied by market participants, recouped through higher volumes.
“The regulation and supervision of the market should be funded on the basis of high trading volumes and small fees, and not on very small volumes and very high fees, such as is the case now; the country’s economy is thus harmed, instead of being supported by the financial sector,” reads the report.
ASF officials announced they were already working on cutting fees and would shortly publish the new list of fees.
Ludwik Sobolewski, BVB general manager, did not come up with a clear answer when asked whether BVB would cut trading fees. As a matter of fact, market sources say this point of the report was the only one the management of the bourse did not entirely agree with. To cut fees, BVB needs to ask the permission of shareholders and these are not happy with the outlook of lower financial results.
BVB last year moved to modify trading fees, but the market operator’s shareholders rejected proposals.
However, a cut in fees should spur foreign investments on the Bucharest bourse, which would benefit the entire market.
(English version by Catalina Apostoiu)