In any developed economy, the function of the securities market indicator is performed by the Stock Exchange, appealing to perform functions of a well organized market thus ensuring the place where the supply and demand meet. The result is the best price for the Buyers and the Sellers. Its main purpose is to develop an organized stock market, aimed at infrastructure creation and service rendering, ensuring conclusion of the civil-legal transactions between the market's participants, the transaction subject is securities. The Stock Exchange is as a trading, professional, normative and technological basis of the securities market. All information about supply and demand on the securities is concentrated at it, what creates favorable conditions for the best rate of securities and formation of the centralized trading space. As a form of the organized market, the Stock Exchange has its own specific character, distinctive from other markets, in particular, from financial ones.

History reference of the Stock Exchange of Moldova

In December 1994, the Stock Exchange of Moldova (SEM), a close company, was established under the Law on securities circulation and stock exchanges. 34 promoters – the securities market professional participants took part in its establishing. First transactions were held on June 26 1995, accepted as the birthday of the Stock Exchange of Moldova.

The legal and organizational base, contributing to complex processes on the capital market, was created with the Stock Exchange's opening.

Owing to the USA's support (the assistance was rendered by means of the USAID Agency), the Stock Exchange is equipped with the advanced technology for stock auctions.

In opinion of international experts (in the 1998-year) of the European Bank for Development and Reconstruction, the Stock Exchange of Moldova is a fast developing, progressive organization, prominent among new stock exchanges of Eastern Europe, with the minimal risk level. Since May 1995, it is an active member of the European-Asian Stock Exchange Federation, established in 1995 on the initiative of the Stock Exchange of Istanbul. The objective of the Federation is:

* to develop capital markets of the member-states, in particular to improve the organizational structure;

* to settle problems concerning regulation and self-regulation of the mechanism for brokers and dealers;

* to efficiently organize monitoring;

* to work out principles of cooperative management, etc.

At the initial stage of the SEM's development, the authorized capital adequacy standards were set for the Stock Exchange. Initially, the authorized capital totaled 238000 lei, in 1998 it made 392 thousand lei and at present it amount to 500 thousand lei. The equity capital adequacy norms, i.e. 650000 lei, including guaranty fund adequacy norms, i.e. 30 % of the authorized capital, which were set by the legislation, are observed at present.

In 1998, the SEM established the National Securities Depositary (NSD), a non-commercial close company. The event coincided with the third anniversary of the first auctions. Simultaneously with the capital market development, the SEM's share reduced, while the stocks were divided between the NSD participants. In 1998, the introduction of a new trading system integrated with the depositary system gave an opportunity to operatively carry out transactions. The system implementation as well as the NSD establishment became possible thanks to the American company Price Waterhouse and USAID. At the initial stage, the number of issuers included in the depositary system amounted to 5, their number totaled 48 by the 1999 year-end, at present all securities admitted to auctions at the SEM are in the National Depositary, except for investment funds' securities.

In autumn 2001, new commissions and contributions were fixed and divided between the Stock Exchange and the National Depositary. At the same time, on the basis of a tender, the President of the National Depositary was elected; a bank - one for the two structures - was also elected; the monitoring of all constituent and normative documents was carried out; the Conception of the National Depositary, worked out by the National Commission, was being implemented

In April 2000, the Stock Exchange of Moldova received the status of a self-regulating non-commercial organization. As a self-regulating organization, the Stock Exchange is a constituent part of the common mechanism of the securities market regulation, vested with corresponding authority: it works out regulations and standards of its Members' activity.

In 2000, the introduction of the SEM's new Regulations changed the auction mechanism in its quality terms. At this time the Regulations was essentially changed, amendments in the auction technology made.

Within the frameworks of the Regulation requirements, a number of regulations, procedures, instructions, regulating the Stock Exchange's activity, were taken. Besides, the Board of arbitration and the Commission on adherence and consideration of issues concerning infringement of the SEM's Regulation requirements and measures of the disciplinary punishment have been formed. Despite the fact that during last years a number of essential measures aimed at the SEM's development were taken, the results of the stock activity leave much to be desired.

The introduction of the stock exchange index proved to be a positive moment in the development of the Moldovan capital market, and in particular of the SEM itself. At the beginning of 2002, the National Commission introduced the CNVM-32 index into circulation, the official publication of which was launched since the summer of 2000. The index is calculated every week following the SEM's trade session Friday (or Monday). The most world-known index "Dow Jones" serves as a basis for the CNVM-32 calculation. "Dow Jones" index is calculated in the regime of the real time using the results of the New York Stock Exchange auctions.

The structure of the CNVM-32 portfolio almost reflects the structure of the GDP of Moldova: 57.55% of enterprises, included in the index, belong to the food and drink production; 19.42% - to the light industry; 15.85% - to the heavy industry; 7.18% - to the service industries.

The stock exchange index is necessary for experts to be more aware of the economy development, to follow the dynamic of its development. Investors – national and foreign – watch over their investment safety using the index.

Specialists consider the index to be not quite classic, as the Moldovan economy almost does not work. However, it shows a certain tendency on the stock market. The Moldovan Stock Exchange activity is too low for the index to really be a guiding line for financial planning, speculation and other activities.

Probably, in future, some certain activity at the Stock Exchange will rise together with essential restrictions of the off-floor market activity. However, at the present time, the situation with CNVM-32 is such that any fluctuations will show some tendencies if not on the market than in respect of certain issuers.

In June 2002, the Stock Exchange of Moldova celebrated its 7th anniversary. It is not a long period from the point of view of the stock exchange market establishing. At the same time, it is an epoch of the stock exchange market development. During the period of its development, the Stock Exchange of Moldova underwent a hard evolution way of its making. The legislative and normative base underwent though changes since the moment of its formation and at present it took a quite new state and influenced on the activity of all participants of the stock exchange market including the Stock Exchange itself.

We present some brief information about the Stock Exchange.

The Structure of the Stock Exchange of Moldova

The supreme ruling body of the Exchange is the General Assembly of its Members. The united, well-organized and efficient management of the Exchange is performed by the Exchange Board in the periods between the Members' Assemblies. The Exchange Board consists of 18 persons, elected for a year. Since 1997 to the present time, the SEM's director is Dodu Cornelii. The Exchange Stock's activity is directly carried on by the Exchange's Departments, performing the clearly fixed functions on the basis of their own Regulations on organization, functioning, adopted by the Exchange's President. At present, the following departments and subdivisions function at the SEM:

1. Marketing, Listing and Quotation Department. It is engaged in registering securities at the Exchange, in examining and including securities in the Exchange listing. Listing is a system of the market support that creates favorable conditions for an organized market, that allows to reveal the safest and the most qualitative securities and promotes their liquidity. The Department pays a special attention to the following objectives: the shareholders' policy, securities and dividends policy. A special role of the Exchange is its role as an information source, as organized market, as a source of dissemination of information about securities. In the monthly bulletin "Bursa de Valori a Moldovei" (the Stock Exchange of Moldova), the Department publishes information on securities admitted to circulation at the Stock Exchange, presents statistics and auction analysis, as well as other information. All information regarding information on exchange transaction statistics is the property of the SEM.

2. Clearing and Billing Department. Clearing refers to the complex of actions made by the Department as to collect, check, correct and confirm the information on transactions for settlement, on document preparation to effect transactions, as well as information regarding off-set of mutual liabilities of the Stock Exchange's Members.

3. Market Supervision Department – performs the following functions:

* observance of the normality and requirements of the legislation in the Stock Exchange's activity;

* supervision – the department carries out constant control over the activity of the Stock Exchange's Members and over the activity with securities as to guarantee the proper behavior of the Members on the securities market;

* settlement of legal matters.

1. Electronic System Department. The Department's functions are to control and maintain the electronic system as to effect transactions at the Stock Exchange.

 MD-2001, mun. Chişinău, bd. Ştefan cel Mare şi Sfînt 73, 352

 (+373-22) 277594

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