The three-day official study visit of the representatives of the Jordanian Securities Commission to the Financial Supervision Commission was carried out under the TAIEX Instrument (Technical Assistance and Information Exchange Instrument) managed by the Directorate-General Enlargement of the European Commission.

The Jordanian institution was established in 1997 as an autonomous administrative body which oversees the capital market in the Kingdom of Jordan. The mission and goals of the Jordanian Securities Commission as well as those of the Financial Supervision Commission of Bulgaria are the creation and maintenance of an effective, fair and transparent capital market. Its main tasks are the protection of the interests of investors, the protection of the capital market from different types of risks, strengthening the confidence in the market, the improvement of local legislation and the Commission’s activities. The supervised entities of the Jordanian Commission are the Amman Stock Exchange, the Securities Depository, mutual funds and investment firms. In 2008, the Securities Commission of Jordan adopted the multilateral Memorandum of Understanding of IOSCO.

Bearing this in mind, the cooperation between the two institutions has solid foundations and the experience of the FSC as an institution within an EU Member-State is extremely important and useful for the Jordanian experts.

During their visit, the guests got acquainted with the experience of our supervisory authority regarding its practice of separating of accounts, content of contracts with customers, separation of client assets in the event of bankruptcy, bank settlement of accounts and the control exercised by the FSC. The Jordanian experts were informed of the relations with investment intermediaries, as well as with the types of statements that they provide the FSC when they have to perform the separation of accounts. The guests were presented with case studies on the topics discussed. This study visit has enabled not only the representatives of the Jordanian Securities Commission, but also their Bulgarian counterparts, to discuss new perspectives, to identify best practices and to be better prepared for the challenges that arise in the global financial world.

The Bulgarian Financial Supervision Commission has gained considerable experience in European projects which deal with training and strengthening the administrative capacity of countries on the Balkans (Bosnia and Herzegovina, and Montenegro), but had not yet had the opportunity to meet colleagues from the Kingdom of Jordan. Hence, this visit was seen as an opportunity to expand our international contacts in the Middle East.

22 May 2012, the National Assembly of the Republic of Bulgaria unanimously elected the new deputy chairman of the Financial Supervision Commission – Mr. Nikolay Popov. He will be responsible for Investment Supervision Division in the FSC. Before his election, Mr. Popov held the positions of Chief Secretary to the Commission. Previously, he developed his career as Chief tax inspector, Executive Director of the National Revenue Agency (NRA), financial manager of “Festa Holding”, and managing administrative affairs of “Alfa Finance Holding” AD in Macedonia. He was a Board member of the NRA; member of the Management Board and participant in the Meetings of Representatives of the National Health Insurance Fund, Member of the Supervisory Board of the National Insurance Institute and a member of the Executive Board and participant in the General Assembly of the Indo-European Organization of Tax Administrations (IOTA).

Nikolay Popov was offered for the position by the Chairman of the FSC – Mr. Stoyan Mavrodiev. In his official speech to the National Assembly on the proposal Mr. Mavrodiev said: “I am convinced and I guarantee that Mr. Nikolay Popov will contribute with his professionalism and personal qualities to the successful realization of goals and objectives that the Commission as a state institution responsible for supervision and regulation of the non-banking financial organizations must implement “.

The Chairman of the Bulgarian Financial Supervision Commission – Mr. Stoyan Mavrodiev visited the Second annual international forum organized by the Centre for Global Dialogue and Cooperation in Vienna, Austria. As the sole representative from a Bulgarian state institution who participated in the event, he held meetings with President Clinton, General Wesley Clark – Supreme Allied Commander Europe of NATO 1997-2000, and the governing body of the Qatar Investment Fund, headed by its President – Professor Al Meer. They discussed a number of opportunities to attract foreign investment in the country to generate revenue for the budget of Bulgaria of over 100 million euros, which could result in new jobs. Presentations and proposals were made during specifically organized meetings. Mr. Mavrodiev said: ”I will inform the Prime Minister Borisov about the identified ideas for investment opportunities in Bulgaria as I will personally deliver the messages”.

The Chairman of the FSC took part in the discussions together with the official panelists at the event – Vladimir Kavaric, Minister of Economy of Montenegro, Anatoly Karpov – First Deputy Chairman of the Russian State Duma Committee for Natural Resources, Environment and Ecology, Giles Chichester – President of the European Energy Forum, and Dr. Claus Raidl – President of the Austrian Central Bank. The messages of the Prime Minister of Zimbabwe and of the Deputy Prime Minister of Kosovo were outlined as well. The conference ended with the official award ceremony which was preceded by the keynote speech of Bill Clinton.

The Bulgarian Financial Supervision Commission hosted a study visit of experts in the insurance field from the Central Bank of Republic (CBK) of Kosovo in the period 19-23 March 2012. The representatives from Kosovowere introduced to the licensing procedures, the methodology for on-site inspections and verification of documents and topics on financial reporting and analysis.

 Future cooperation between the CBK and FSC, especially the opportunities for implementing joint projects in the insurance sector, was also discussed. In this regard, the FSC’s experience as a partner in twinning projects financed by the EU was shared. A topic of the visit was also the FSC’s role in the process of EU accession and the harmonisation with the European legislation.

On the 6^th and 7^th of March 2012, the Financial Supervision Commission (FSC), jointly with the High School of Insurance and Finance (VUZF) and the Ministry of Education, Youth and Science, held a two-day training on “Financial and Economic Literacy” for students from the 11^th Grade of the National Business and Finance School and the National Trade and Banking High School in Sofia. This is a new educational module developed by the three institutions to increase financial literacy of young people in Bulgaria.

Fulfilling one of its priorities by implementing an active educational policy to increase the financial competence of the general public, the FSC has developed several training modules for different social groups. One of the week-long training programs for students held annually enjoys strong public support, which is why FSC has also developed shorter training modules within one or two days.

The current two-day program, implemented jointly with the Center for Continuing and Vocational Training to VUZF and the Ministry of Education, Youth and Science, is a pilot project for students from Sofia, with the prospects of including young people from all over the country. The program was divided into two parts: a theoretical and a practical one. In the first part, lecturers from VUZF and FSC gave presentations about the functioning and the specificity of the capital, insurance and pension insurance markets and the role and functions of the FSC to the students.

During the second day, the students paid a visit to the Bulgarian Stock Exchange, where experts explained to them practical aspects of the functioning of the market and the pupils had the opportunity to observe stock trading in real-time.

Later on, the participants in the program visited the Insurance Company “Interamerican” and got acquainted with the specifics of the insurance business.

The training was attended by twenty students and four teachers who were extremely satisfied with the program and expressed their willingness to attend future training modules.

On Dec 14th, 2011 the Bulgarian Financial Supervision Commission held a major international conference on “Development Outlook of the Non-banking financial sector”. The event was to present the new European policy in the financial sector and to stimulate discussion about the situation of the Bulgarian capital market and its future development.

The event was opened by Mr. Boyko Borisov, Prime Minister of Bulgaria. This gave a clear and strong signal to the business for the efforts that the Bulgarian government is making to overcome the effects of the global crisis in the non-banking financial sector and confirmed the priority of the country for full integration into the European structures. In his speech, the Prime Minister stressed that the European Union is on the verge of making extremely important decisions for its future development many of which are related to financial security and stability of financial markets. In this situation, the role of authorities dealing with supervision of the financial sector is crucial. In times of financial crisis, state institutions are urged to reinforce people’s confidence in the stability of markets in order to ensure their proper functioning and integrity.  The Prime Minister also noted that the Financial Supervision Commission proved that it has the capacity to cope with the challenges of the crisis as a result of the FSC Chairman’s personal efforts and the efforts of the institution.

In his turn, Mr. Stoyan Mavrodiev, Chairman of the FSC said that the financial crisis has impacted heavily on the global financial markets. This requires immediate action to overcome the consequences and to stabilize the financial markets nationwide. As part of the European financial regulators FSC supports the actions of the European Commission and together with the regulatory authorities of other member states is interested in seeking solutions and creating policies for effective oversight of the financial system. FSC is to promote these steps more stable, transparent, predictable and accountable to the public, investors and consumers.

A special guest speaker to the conference was Mr. Steven Maijoor – President of the European Securities and Markets Authority. He gave strong support for the Financial Supervision Commission. On Dec 13th a discussion meeting with representatives of the non-banking financial sector in Bulgaria was held. Mr. Maijoor presented immediate tasks and priorities of ESMA. Moreover, he answered many questions from interested parties regarding how the European supervisor authority interacts with the investment community.

Marcus Repnik, Permanent Representative of the World Bank for Bulgaria, the Czech Republic and Slovakia stated that the government regulators play a key role in shaping the capital markets. “The challenge now is to develop a regional capital market, which exceeds national borders”, said Mr. Repnik. In his view, this will allow better investment opportunities. According to him financial services and products are becoming more sophisticated and complex, and consumers need clear rules, effective supervision and responsibility.

After the capital market session, the conference “Development outlook of the non-banking financial sector” was divided into two discussion panels. Mr. Angel Dzhalazov – Vice-Chairman of the FSC chaired the pension insurance session on profitability of the pension funds in a financial crisis condition and perspectives for introduction of multifunds in Eastern European countries. Ms. Antonia Gineva – Member of the Board moderated the financial consumer protection and financial education module.

Additional information including videos from the conference is uploaded on the following link:
http://www.worldbank.bg/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/BULGARIAEXTN/0,,contentMDK:23069105~menuPK:305444~pagePK:2865066~piPK:2865079~theSitePK:305439,00.html

European Securities and Markets Authority (ESMA):

• warns investors against dealing with unauthorised firms offering foreign exchange investments, and
• alerts retail investors to the main risks involved in forex trading.

The full text of the Warning is available here:

http://www.fsc.bg/public/upload/files/menu/FOREX_Investor_Warning_EN.pdf

The objective of financial statements is to provide information to a range of users for the purpose of economic decision making. To be useful, such statements must present fairly the financial position, performance and cash flows of the reporting entity. Where information which is required by the relevant financial reporting framework is omitted or misstated and such information could influence the economic decision making of a user, financial statements cannot be said to achieve a fair presentation. The concept of ‘materiality’ is used to describe such information.

A recurring theme of discussions at the European Enforcers Coordination Sessions (a forum in which all European National Enforcers of financial information meet to exchange views and discuss experiences of enforcement of IFRS) is the apparent differing views regarding the practical application of the concept of materiality amongst preparers, auditors, possibly users of the financial reports and, in some instances, accounting enforcers. The purpose of this consultation paper is to seek comments from interested parties on their understanding of various aspects of materiality in an effort to contribute to a consistent application of this important concept in financial reporting.

The Consultation is available here: http://www.esma.europa.eu/popup2.php?id=8053

All contributions should be submitted online at www.esma.europa.eu under the heading ‘Consultations’ by 29 February 2012.

Who should read this paper

All interested parties are invited to comment on this consultation paper. It will be primarily of interest to those charged with the governance of issuers who prepare their financial statements under IFRS, the users of the financial reports prepared by same, the auditors of such entities, and other parties who have a particular interest in the concept of materiality and the application of same in an IFRS context.

Next steps

ESMA will consider the feedback it received to this consultation paper in Q2 2012. Based on the outcome of the consultation paper, ESMA will go further and publish a final report later in 2012.

http://www.fsc.bg/public/upload/files/menu/Public-Statement-Public-debt-in-IFRS-Fin-Statements.pdf

Today, the Bulgarian Financial Supervision Commission (FSC) in consortium with the Bulgarian National Bank (BNB) and De Nederlandsche Bank (DNB) on the one side, and the financial regulators of Montenegro – the Central Bank of Montenegro (CBM), the Securities and Exchange Commission (SEC), the Insurance Supervision Agency (ISA) and the Ministry of Finance of Montenegro, on the other, successfully completed the 24 months’ twinning project MN 08 IB FI 01 “Strengthening the regulatory and supervisory capacity of the financial regulators”. The project was launched on 30 November 2009, financed by the European Union (EU) through the “Instrument for Pre-Accession Assistance” with a budget of €1,199,966.94.
The project has contributed to the harmonization of the Montenegrin legislation with the EU acquis communautaire in the area of banking, securities, pensions, insurance and anti-money laundering and terrorist financing (AML/CFT), as well as to strengthening the financial stability, the cooperation between the beneficiary country (BC) institutions and enhancing their administrative capacity. The project results are an important step towards the preparation of the country for the negotiation process to EU accession.
The main results achieved are as follows:
– 8 new laws were prepared, 3 of which were adopted by the Parliament: the Law on Financial Stability Council, the Law on Take-over Bids and the Law on Investment Funds.
– An Action Plan for Basel II implementation, a new Capital Adequacy Decision, a framework for the implementation of Pillar 2 requirements of Basel II Accord and the respective guidelines, manuals and reporting forms were prepared. This will allow the CBM to plan its work over the next few years and help it set priorities. 
– A Financial Stability Council was established and action plans for crisis management situations prepared. 
– Gap analysis on the compliance of Montenegrin legislation with EU requirements was prepared as well as guidance papers for the transposition of all major directives in the area of securities and pension. Nine operational manuals and methodological instructions are ready and most of them are already implemented. Twenty four different trainings, including 2 international conferences, were carried out.
– In the area of insurance supervision Guidelines on how to perform self-assessment of the core principles of the International Association of Insurance Supervision (IAIS) were prepared, as well as a Self-assessment report of the IAIS core principles. Work plans for off-site and on-site inspections were adopted. The preparation for transposition of the Solvency II directive in Montenegro is on a positive track and a Road map is being implemented. Also, a National Bureau of Insurers was established.  As a result of the extensive training and joint work the insurance supervision was strengthened.
– AML/CFT inspection manuals, inspection programs, a MoU on cooperation between the BC institutions for the prevention of money laundering and terrorist financing were elaborated.
– Increased public awareness – an Investor protection and awareness strategy was drafted and is under implementation; information brochures on AML/CFT for the public and for the financial institutions, as well as on the capital market and the voluntary pension funds were issued and distributed; a SEC Information centre was established, a communication seminar for journalists and a seminar for law enforcement authorities on AML/CFT were carried out.

Additional information could be found in Section “Projects”, where the Brochure for the closing event of the twinning project is published:
http://www.fsc.bg/public/upload/files/menu/DipljanCrnaGoraBG_ENFINAL_0.pdf