Stock Exchange Decided to Step up Cross Transaction

Baku Stock Exchange (BSE) made changes to the rules adopted on October 29, 2012 to enter into cross transactions. The waiting time for receiving bids from other brokers on such proposals will be doubled from February 10.

The rules have been applied to the Exchange from 1 February 2013. However, as it turned out, in practice, BSE has not coped with the task to form a fair price for cross transactions. The daily summary of transactions for the purchase and sale of shares released by the Exchange shows that they are still bought and sold mainly at face value. In other words, brokers "do not notice" the application of their colleagues, who at the same time act as representatives of the seller and buyer of shares through the stock exchange platform. Will the situation change for the better with the increase in the waiting period for accepting applications from 30 to 60 minutes? Time will tell, experts in the stock market say.

With the provision of a "time corridor" for targeted transactions, the aim was to form a fair price on the secondary market by receiving competitive bids, to increase transparency and to protect the interests of investors. On BSE almost 100% of the transactions are cross transactions, and prices on them do not change.

It should be noted that a bulletin board has recently appeared on the stock exchange, where information is available on the exchange-traded securities. Investors have no other source of information about the real value of the shares.

Recall that the formation of fair prices for securities is provided by the "State program on development of the securities market in Azerbaijan for the years 2011-2020." In many cases, the actual value of the shares exceeds the fixed exchange rates by several times. And in some cases the actual stock price is below its nominal value. However, brokers package these transactions on an established minimum face value. --08D