Investment on any capital market, either it is about natural entities investors, either institutional, such as investment funds or private pension funds, is based, first of all, on the trust in the respective market. “The better the mechanism of good practices on a capital market works, the trust of investors is higher”, mentions Octavian Patrascu, business developer.
The developed capital markets work based not only on regulations, but on a good practices code which makes them attractive and which increase the trust of investors, given that the investment on any stock exchange means, ultimately, contribution to economy financing.
“Investors take into consideration, when trading on capital markets, not only the profitability of the company whose actions are found in their portfolios, but the way the respective market is regulated “, states Patrascu Constantin Octavian, business developer, in whose opinion “a stock exchange cannot function without inducing the feeling of trust, through good practices “.
Along with the onset of the global financial market, the introduction of new regulations taking also into consideration some rules of investment behavior on capital markets has constituted a public debate subject, especially for stock exchanges being on the up-grade. For example, for Bucharest Stock Exchange (BSE), which today is in the process or transformation from a customs market in an emerging market, the problem of regulations and good practices is an important and highly topical one.
“Nowadays, Bucharest Stock Exchange (BSE) is in the process of transformation into an attractive destination for investments, in the Central and Easter Europe region, and the improving of its sustainability is one of the key points “, says Constantin Octavian Patrascu.
About one month ago, the officials of BSE declared that starting with 2014 the stock institution, together with the European Bank for Reconstruction and Development (EBRD) have made efforts for reshaping the Corporate Governance Code which meets good practices rules, a Code which is intended to be implemented until the half of 2015.
Moreover, BSE is even preparing to launch a corporative governance index, which will analyze the listed companies depending on their transparency, the quality of reporting, the compliance with the principles of the Corporative Governance Code, as well as the predictability of dividends and forecasts.
“As the European Union continues the activity of promoting the corporative responsibility and the responsible investment, the stock exchanges are important partners for implementing the public policies within market realities”, declared, about one month ago, James Zhan, Manager of UNCTAD, Investment and Enterprise Division, on the occasion of concluding the partnership with BSE, upon UNO’s initiative, Sustainable Stock Exchanges (SEE).
Concretely, by participating to SSE’s initiative, BSE intends to strengthen its commitment to create a sustainable and transparent environment for all stakeholders and to participate to global forums and projects performed in multiple countries, in order to discuss the best practices and to learn from partner stock exchanges and from other key stakeholders.
BSE manages stock, bond and other financial instruments markets through regulated platforms or alternative systems and provides a wide range of services to participants in financial markets.
“Early warning mechanisms must function better, and the regulation framework, as well as the sanctions regime, needs changes which will increase the market participants’ tendency to observe the rules and good practices”, states publicly Daniel Daianu, Economics professor, within an event held some months ago, regarding the development of capital market in Romania.
“Indeed, the global financial crisis has induced the feeling that stock markets need to be consolidated, including the central counterpart, central depository, the capital market infrastructure, a fact implying regulations, including of good practices, taking into account the legislation of the European Union”, thinks Octavian Patrascu.
These concern the conduct of market players, the quality of capital market institutions, the activity of large groups on many markets, the markets regulatory and supervisory system etc.
The fact that BSE works on a new Corporative governance Code which is to replace the old one introduced in 2008, and which broaches the good practices problem, represents a positive signal for investors, in the sense that the local capital market can be considered seriously an investment alternative, comments Patrascu Constantin Octavian.
This article was published in capital.ro by Octavian Patrascu