Memories of joint efforts

In 1992, the National Bank of Romania, Ministry of Finance and Romanian Investment Institute (headed by George Constantin Paunescu) laid the groundwork for the establishment of the stock market in Romania. An act of bravery for a country that was still haunted by the spectre of communism.

However, the enthusiasm at the beginning of the game, coupled with the challenge of laying the brick on a capitalist institution and the desire to create a regional stock exchange hub helped them overcome all drawbacks.

But the Romanian stock market is nothing like its founders were imagining it 15 years ago.

Political interventions, coupled with the exclusion of the privatization and financing projects as well as entrepreneurs’ focus on their own businesses have put a crimp on the development of the stock market as it was planned.

The main regrets of BSE founders are related to the fact that the stock market hasn’t grown into a regional stock exchange hub as they were seeing it 15 years ago, but stagnated at a yet infant level. But they are satisfied for their success in building a politically-unbiased temple of capitalism in a politically-biased economy.

After a financial crisis that showed Romanian market is still at its infancy and lacks substance, the easiest thing to do is point fingers. Many forget that in 1995, after three years of joint efforts, on June 23, the Bucharest Stock Exchange was officially ringing its opening bell for the first time.

First steps to the building of a temple of capitalism


The persons involved in the establishment of the Bucharest Stock Exchange that are even now part of the institution are Stere Farmache, the 15-year chairman and Adriana Tanasoiu, director of the Central Depository, remember the first steps of the modern stock exchange.

Although they no longer work in the capital market, Costin Donoaica and Petru Prunea have been two key persons in the inception of the Bucharest Stock Exchange 15 years ago, together with the first authorized brokers in Romania, Adrian Simionescu and Valentin Ionescu.

The origins of Bucharest Stock Exchange traces back to 1992 when the three institutions were talking about the need of a stock market to meet conditions imposed in the memorandum with the International Monetary Fund.

Stere Farmache recalls that in 1990 he was with the Ministry of Finance, a ministry headed at that time by Theodor Stolojan who proposed the inception of a stock exchange. The proposal started to grab media headlines, and the ministry’s job was to back the initiative.

“In 1991 – 1992 while on a visit to France, I got in contact with stock exchange institutions. When I got back in the country, the proposition had had the political backing already and an embryo of Romanian National Securities Commission was already shaping up inside the ministry – National Securities Agency, and I was responsible for its smooth operation”, said Farmache.

The drafting, passing and enforcement of the law for the establishment of the Bucharest Stock Exchange lasted 2 years, from 1992 to 1994. Initially, the draft law provided that the stock market is a limited liability company (a statute that was later acquired, in 1995), but the first draft was rejected by the Parliament.

Madgearu Law, in 1929 marked a milestone for the legislative unification of the stock market regimes in Romania. The stock exchange was then defined as a “public institution created to bring merchants, industrials or producers, carriers and insurers under one roof for the trading of private and public securities, currencies, commodities, rental of ships and hedging of risks of any kind”.

Looking at the private sector, Adrian Simionescu remembers three key institutions acting on several areas: Ministry of Finance, National Bank of Romania and the private sector.

The National Bank of Romania set up a Stock Exchange Design and Implementation Center where a part of NBR staff was transferred. At the Ministry of Finance was the National Securities Agency (the future RNSC). The first initiative of the private sector came from George Constantin Paunescu through Romanian Investment Institute.

Day 1

The establishment process coincided with the inception of Stock Exchange Association – a group of 20 brokers.

Farmache explained that the Stock Exchange Association was not a standalone entity; it didn’t have judicial autonomy at first. But it achieved it in April 1995, when Romanian National Securities Commission approved the statute of the Stock Exchange. “The Stock Exchange Association was some kind of a general meeting which appointed its board and the board appointed its managing director”, said the chairman of the Bucharest Stock Exchange, former managing director until December 2008.

The first board of the Stock Exchange Association was chaired by Ioan Mihaila.

On June 1, 1995, Stere Farmache was appointed as managing director of the Bucharest Stock Exchange and the institution obtained judicial statute.

The opening ceremony was held on June 23, at the ground floor of the National Bank of Romania building. At that time, the infrastructure of the stock market was ready, fewer issuers, but the founders decided to celebrate the event which gathered representatives of RNSC, NBR and even the president of Romania, Ion Iliescu attended.

“We were very anxious to inaugurate the stock market, we wanted an operational market, and we realized that celebrating the event will draw media attention on the fact that a new financial market segment is shaping up. We had signed the inception documents, but there was still more work to do. We had to connect shareholders registry to the trading systems, clearing mechanisms and coupon-to-stocks swap process”, Adrian Simionescu said.