Financial Services Newsletter No. 9/2011

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Regulation Issued by the National Bank of Romania (NBR)

More stringent criteria for consumer loans in foreign currency

(NBR Regulation no. 24 of 28/10/2011 on consumer loans published in the Official Gazette no. 767/2011)

The new consumer loans regulation aims to balance the ratio between consumer loans offered in national and foreign currency by imposing more stringent criteria for the latter.

The Regulation also contains provisions that aim to improve the mechanism used to inform and warn customers with regards to the risks and consequences of loans in foreign currency and with the possible negative consequences of interest and currency rate fluctuation.

This regulation repeals the provision of NBR Regulation no 3/2007 regarding limitation of the credit risk on the loans to consumers.

Regulation Issued by the Romanian National Securities Commission (NSC)

NSC regulates introducing brokers

(NSC Decision no. 998 din 6/10/2011 regarding the „introducing broker” activity published in NSC Bulletin no. 40/2011)

The NSC has established a legal framework for the activity performed by introducing brokers. According to this, the activity is performed by a financial services company that receives securities orders from its clients and redirects them to an intermediary for execution, or that promotes financial services for an intermediary.

Therefore, orders can be taken from customers in Romania and executed by investment firms from other Member States or the other way around, if passporting or NSC notification requirements ar met.

Financial Services Companies are required to notify the NSC of the existence of each “introducing broker” contract and adapt those previously concluded to the information and publicity rules imposed by the new regulation.

Clarifications regarding stockholders’ concerted action

(NSC Decision no. 994 din 6/10/2011, published in BSC Bulletin no. 40/2011 regarding shareholders acting in concert )

The NSC decision offers clarifications regarding the concept of concerted activity which is related to certain capital market law prohibitions. Therfore, calling together the general meeting of shareholders or proposing new items on the agenda by using the advantage of cumulatively holding more than 5% of the share capital of a company are not necessarity considered to be acting in concert.

Nonetheless, the existance of concerted action may still be demonstrated if other clues point to this besides the activities mentioned above.

Governing law of securities offered by non-EU issuers in Romania

(NSC Ruling no. 38 / 6/10/2011, published in NSC Bulletin no.40/2011 on the applicable law to offers of securities issued in non-EU states

The transfer of securities as a result of public offers made in Romania by non-EU companies will be governed by the law of the country of origin of the issuing company as long as the offer is addressed to less than 100 investors.

In case there is no intention to apply for admission to trade on a Romanian regulated market the issuing company has the following obligations: (a) During the period of the offer , to notify NSC on the terms of the offer; and (b) to provide relevant information such as specifying the market where the shares will be traded, the category and the number of persons being offered the shares, the period when the shares will be awarded and certain specific elements relating to the shares offering.

The NSC extends the application of the global accounts sytem and the non-prior approval mechanism

(NSC Decision no. 1059 from 21/10/2011 , published in NSC Bulletin no. 40/2011, regarding the extention of the global accounts system and of the non-prevalidation mechanism of the financial instruments taken into account to form the BET index developped by SC Bursa de Valori Bucureşti SA)

As of November 14th, the global accounts system and the non-prevalidation mechanism are applicable to the stocks that form the BET index of the Bucharest Stock Exchange.

BET is a free float weighted capitalization index of the most liquid 10 companies listed on the BVB regulated market.

According to the press release of the NSC, this step fits into a comprehensive program to align trading mechanisms with international practice.

Mandatory registration of securities traded on EU regulated markets

(NSC decision no. 1060 din 21/10/2011, published in NSC Bulletin no. 40/2011, regarding Instruction no. 4 /2011 on the registration and deregistration of securities from NSC records.

As of October 21st, the securities trated on a regulated market of an EU member state must be registered with the NSC. This requirement applies to securities admitted for trading before the entry into force of the NSC Instruction no. 4/2001. However, in order for this requirement to be applicable, with regards to the respective securities issuer, Romania must be the origin member state in accordance with article 122 of the NSC Regulation no. 1/ 2006 on issuers and securities operations

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