"Radu Lucian Vasile bought 500 Petrom shares worth 275 RON." This is one of the reports about trading by insiders on the Bucharest Stock Exchange, which brokers on the Stock Exchange cannot make much of.
One of the reasons is that most of the 4 or 5 such notifications published on the Bucharest Stock Exchange every day do not specify what connection exists between the person in question and the company.
The law requires reports on the trading with stock of a specific company to be filed by both the members of that company's Board of Directors and the middle management and any other people who have access to privileged information, their relatives, as well as the significant shareholders.
The law prohibits trading on the Stock Exchange based on privileged information (knowledge that is not available to the public) and binds people who are supposed to have access to such information to report all the transactions they conduct, which lends a greater transparency to the market.
Brokers say that although some reports seem useful for investors, most of them are irrelevant.
"First of all, they should specify why that person is an insider. On the other hand, insignificant transactions are reported every day. I think such transactions should be reported at certain intervals and starting from a certain amount," says Octavian Dragolea, Egnatia Securities manager.
Brokers say such reports can help investors make better investment decisions, but they become useless if the reason why the person who notified the Stock Exchange of having bought or purchased shares is considered an insider is not known. "Reports in themselves are useful. Unfortunately, with most of them you have no idea who the person who sold or bought is or how they are connected to the company. Insider trading is useful because even if these people do not know something the market doesn't, they have a better view of the company in question," says Razvan Pasol, Intercapital Invest chairman.
The National Securities Commission (CNVM) admits that when it comes to reports flooding the brokers' screens every day, they should also specify the connection between the respective person with the company.
"The specialised department feels that reports should also mention the connection the person who conducted the specific transaction has with the company in question," stated Ciprian Ene, CNVM spokesman.
Such notifications should include, among others, as CNVM's Regulation 1 / 2006 stipulates, "the reason why the insider and the broker have the responsibility to provide the notification."
As of this year, securities firms trading on the Bucharest Stock Exchange are bound to report to the market the transactions conducted by the people that supposedly have access to privileged information from inside companies.
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