New BVB Programme Seeks to Stimulate Trade Volumes

Starting from today (6 July), the Bucharest Stock Exchange (BVB) will be  piloting a new programme for market makers in a bid to stimulate trading activity. Specifically, the Romanian bourse has introduced a  “revenue sharing scheme”, which essentially amounts to discounted fees for market makers that facilitate a requisite (high) volume of trades according to set parameters.

The programme is part of the larger strategic agenda of BVB, which includes developing the local capital market, enhancing liquidity and increasing the availability of capital market products. Ultimately, the Eastern European exchange is vying to be upgraded from Frontier to Emerging Market status. The strategic agenda includes measures to streamline regulatory processes and increase efficiency within the pre-trade, trade and post-trade environments.

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Under the new scheme, certain registered market makers will receive benefits based on the amount of liquidity they provide to their accounts. The intention is that traders will be encouraged to execute more intraday trades on the shares on which their broker is market maker.

The programme comprises of two new categories of money makers, Classic Market Maker and Super Market Maker, each with different standards, requirements and consequent benefits.

Namely, “The Super Market Maker will place trading orders (buy/sell) for a bigger volume of shares and for a more extended period of time than the ones placed by the Classical Market Maker, and it will pay half of the trading fees applied to the Classic Market Maker”, according to the BVB press release.

Firms (brokers) are therefore able to register as one of the two new categories of market makers for 26 of the 83 companies listed on the exchange. After a minimum 6 months, BVB will assess the program in order to adjust/ extend it accordingly.