Moving Upstream – Romania aims to be rewarded with an Emerging Markets reclassification

By Adriana Tanasoiu, Chief Executive Officer, Depozitarul Central – CSD Romania

At Depozitarul Central we take pride in the fact that we are continuously striving to adapt to the ongoing changes of a complex market whose new regulatory initiatives have revolutionized the post-trade industry. We have a well-directed path and are progressing along it in a simple, efficient, and cost-effective manner, ensuring we deliver what our internal and external clients and partners need.

The creation of an international capital market in Romania is a strong indicator of our competitiveness, supplemented with manifold innovation.

Non-euro countries are already well integrated into the European financial market. The S.T.E.A.M. Project (Set of actions Towards Establishing and Acknowledgement of the emerging Market status) – the Action Plan recently initiated by the Financial Supervisory Authority of Romania to reform the local capital market with the aim of gaining emerging market status – supports our common goal of augmenting the size and liquidity of the market and leads subsequently to economic development. Increasing the investors’ accessibility and the market’s attractiveness, as well as the efficiency of the securities lending operations and short selling transactions, extensively developing the local primary and secondary bond market, attracting new investors and new issuers on the market, further extension of the corporate governance principles to issuers, intermediaries, market operators, central securities depositories, and aligning to the IFRS accounting standards for the entities regulated and supervised by FSA are the main pillars of the S.T.E.A.M. project.

The post-trade strategy of Depozitarul Central, linked to the trading strategies of the Bucharest Stock Exchange is to complete the FSA’s S.T.E.A.M. Project with other related measures and solutions. The construction of settlement and the custody edifice is beginning to change. The post-trade solutions will maintain the same flexibility for settlement streams (domestic and international), enhanced asset servicing, ensuring minimum impact on clients.

Moreover, the first edition of the International Investors’ Guide, part of the Investing Romania programme, now includes relevant information that a foreign investor needs to know when they are interested in investing in the Romanian capital market.

Moving the spotlight onto our ongoing projects, we count on extending DC’s range of cutting edge solutions, to deliver further efficiencies and to maximize choice.

The segregation of trading and post-trading systems is one project which will bring us closer to achieving “Emerging Market” status, whilst increasing the level of investments in the Romanian capital market at the same time.

The introduction of the T+2 settlement cycle for all types of securities in the market, aimed at supporting the harmonization of securities settlement practices across Europe is another important step for raising efficiency and reducing post-settlement risks, whilst stimulating the foreign investments in Romania, a common goal for all national economies.

Implementing the corporate actions standards on the Romanian capital market, mainly challenged by the need to change the issuers market practice, is intended to increase the quality and efficiency of the communication process and to optimise the operational process while reducing risks.

The TARGET2 Securities programme is an important opportunity for the Romanian market to access one of the most modern Euro settlement platforms, together with the central securities depositories of the most developed European capital markets, reducing associated cross-border settlement transaction costs by up to 90%.

Rounding of the net settled amount will reduce the fragmentation of orders execution and will increase the market liquidity, as a consequence of the planned closure of the Odd Lot market.

In the midst of all these continuous challenges and game-changing projects, our main objective is increasing partnership with our clients. By promoting standardization and enhanced service levels, we are fully committed to move closer towards the new post-trade landscape, both in terms of the timetable and of the expected outcome.

Our team spirit, respect and transparency help us to achieve more every day, both as a leading infrastructure in the Romanian capital market and as a reliable European partner for the international financial market. Romania offers extraordinary opportunities and I am fully convinced that we are ready, willing and innovative enough to be part of this complex marathon towards achieving convergence and competitive goals, and to become a partner of choice in the region.