Bucharest Exchange Trading Index

The first official index for the Bucharest Stock Exchange was launched in September 1997. It was baptized BET, which stands for Bucharest Exchange Trading. The index construction principles have been carefully chosen such as to meet the foremost objective to reflect the price movements of the most liquid 10 stocks that are listed on the first tier of the exchange. In selecting the index constituents, diversification of the respective companiesí activities is sought.

Regarding the principle of computation, this is the same with the majority of internationally renowned indexes, viz a capitalization-weighted chained value ratio. Measures that prompt an intervention in the otherwise fully automated index computation process are capital increases or decreases, stock splits, stock consolidations, and rights issues. In order to compensate for these modifications, a splicing procedure is being used.

The second purpose of the BET index (and related to the first) is to provide an instrument for derivatives trading (index options and futures contracts), inter alia in order to satisfy hedging requirements. The regulatory framework for derivatives trading is currently being designed.

The selection criteria are checked on a quarterly basis by examining the performance of the stocks that compose the index portfolio as well as the growing number of listed companies for potential replacements. The decisions to update the basket are taken by the Index Committee. Currently, more than 60% of the total market capitalization and 70% of total trading volume is covered by the stocks included in the BET basket.

The values of the index are published on a real time basis on the exchange trading system. The values of the index are expressed also in dollar terms for those investors who wish to have such a measure.

Bucharest Exchange Trading Index, Bursa de Valori Bucuresti (Bucharest Stock Exchange). Text: Institute for Advanced Studies, Vienna, 1998. All rights reserved.

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