Romania’s Financial Supervision Authority (ASF) will reduce the fees it takes for stock trades made on the Bucharest Stock Exchange (BVB) from 0.08 percent to 0.06 percent, starting September 16, 2014, the authority has decided.

This is one of the fees paid by brokers on behalf of the investors they represent. The fees which brokers pay to the Bucharest Stock Exchange remain unchanged. Both fees are reflected in the overall fees that investors pay to their local brokers for transactions made on the Bucharest Stock Exchange.

The supervising authority currently charges stock buyers 0.08 percent of the value of the investors' trades on the local market. This means that an investor who purchases shares worth EUR 10 million has to pay EUR 8,000 to the ASF. This will decrease to EUR 6,000 starting September this year. This fee is paid via the brokerage firm representing the investor.

Brokers who act as market makers for stocks traded on the Bucharest Stock Exchange will pay even less to ASF, that is 0.04 percent of the value of transactions they make in the market making process.

The change answers demands from market participants which asked both the market regulator, and Bucharest Stock Exchange to reduce their trading fees, which make the local market one of the most expensive in the region. Both ASF and BVB said they would analyze these requests. So far, only ASF lowered the fees.

The BVB currently charges stock buyers 0.045 percent of the value of their acquisitions and stock sellers 0.117 percent of their sales. So, if an investors buys shares worth EUR 10 million and then sells them, he currently pays EUR 16,200 to BVB and another EUR 8,000 to ASF. These costs are included in the overall commissions that investors pay local brokerage firms who intermediate the transactions.

Brokers were forced to significantly reduce their fees in the last five years, due to lower trading activity on the market and fewer clients. In some cases, the fees that local brokers charge their clients, especially large institutional clients, barely cover the BVB and ASF costs, which generates operational losses for brokerage firms.

Since 2008, almost half of the banks and brokerage firms which were active on the Bucharest Stock Exchange exited the market, while some even went bankrupt.

Andrei Chirileasa, andrei@romania-insider.com