The talks over the possible merger between Sibiu Monetary Financial and Commodities Exchange (BMFMS) and the Bucharest Stock Exchange have broken down. During a meeting the shareholders did not did not approve the merger between these two institutions to be be rejected definitely.
An eventual merger of these two exchanges would lead to a market operator with daily transactions of €16 million. The value of the traded contracts on BMFMS rose to €1.3 billion, while the transactions on BSE totaled €1.83 billion during the same time.
Only shares and some debt instruments are listed and traded on the Bucharest Stock Exchange, while financial derivatives contracts are currently traded on the Monetary Financial and Commodities Exchange.
The Bucharest Stock Exchange has started to trade the futures contracts on indices but they will have to agree with a clearing house interposing between sellers and buyers in case of futures contracts. BSE agrees with the Clearing House from Sibiu in this respect, otherwise it is compulsory to establish a new clearing house to cover this need. This could take few months but the officials at BSE think that this will be finalised at the end of 2006.
“The competition between BSE and BMFMS could have an impact on fees to be more attractive for investors,” says a spokesman for ING. “The rejection of the merger could also lead to a polarisation of the brokerage houses between the exchanges taking into consideration which ones would prefer to trade on the market where they held bigger stocks.”
BSE had been evaluated by Ernst & Young at €75-80 million, while the value of BMFMS was around €6 million. The discussions regarding a possible merger began three years before the merger between BSE and Rasdaq was finalised.