Treasury certificates could soon be traded on the regulated stock market, BSE head says

Farmache added the BSE can assure the logistic support for the financial instruments both for the primary issue as well as for trading on the secondary market.

“It has become clear that investors have an increased appetite for fixed income instruments these days,”the BSE head explained.

Trading treasury certificates gives investors the possibility to close positions before maturity, but also allows for lower issuing costs. 

The treasury certificates issued by MFP are state securities maturing in one year the most and represent loans of the state. 

Farmache also added the BSE supports raising the shareholding ceiling in the Romanian financial investment companies (SIFs) from 1 percent at present to 5 percent, a measure which would lead to a hike in transaction volumes on the market.

The measure would result in an increased free-float and larger market volumes, said Farmache, who thinks the 5 percent threshold is a “reasonable” one. 

According to the capital market legislation in Romania, no shareholder is allowed to own more than 1 percent of the voting rights or securities in the SIFs. 

Companies issuing bonds could benefit from 1-2 percentage points tax cuts

The BSE will also urge the government to grant fiscal stimulus in the form of a 1 – 2 percentage points cut in the profit tax for companies issuing bonds as another measure to prop up the stock market.

“We want to encourage companies to take part in the capital market by issuing corporate bonds,” Farmache said.

The BSE head added a profit tax cut could stimulate companies to use this type of financing, which  poses risks as well in the current economic background.