effectiveness and efficiency of debt capital markets a … · 2020-06-16 · effectiveness and...

Effectiveness and Efficiency of Debt

Capital Markets – A Comparative Study Transactions Costs and Timing for Issuance, Listing and

Trading of Locally Issued Debt Securities

Final Report February 2020

Effectiveness and Efficiency of Debt Capital Markets – A Comparative Study

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This project is supported by the

.


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In order to provide a fair and

comprehensive comparison, the data

shown in this report references calendar

year 2018.

This report may be updated to reflect changing market conditions in due course.


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Table of Contents

1. Executive Summary ........................................................................................................................................... 8

2. Introduction....................................................................................................................................................... 11

2.1. Purpose of this Report .......................................................................................................................... 11

2.2. Benchmarking & Comparison Framework ....................................................................................... 11

2.3. Model Portfolio ....................................................................................................................................... 12

2.4. Model Issuer ............................................................................................................................................ 13

2.5. Getting the Most from this Report ..................................................................................................... 13

3. Market Dynamics ............................................................................................................................................. 15

3.1. Bond Yields .............................................................................................................................................. 15

3.2. Listing Requirements ............................................................................................................................. 17

3.3. Size of Bond Market ............................................................................................................................... 18

3.4. Bond Market Trading ............................................................................................................................. 19

4. Primary Market ................................................................................................................................................. 22

4.1. Government Bond Auction Type and Frequency ........................................................................... 22

4.2. Government Bond Auction Costs ....................................................................................................... 24

4.3. Corporate Bond Issuance Structure .................................................................................................. 25

4.4. Corporate Bond Issuance Fees ........................................................................................................... 26

5. Secondary Market ............................................................................................................................................ 30

5.1. Trading Systems ...................................................................................................................................... 30

5.2. Indirect Costs - Spreads ........................................................................................................................ 31

5.3. Trading Transaction Fees ..................................................................................................................... 34

6. Settlement and Safekeeping ......................................................................................................................... 36

6.1. Settlement ................................................................................................................................................ 36

6.2. Safekeeping.............................................................................................................................................. 37

7. Taxation .............................................................................................................................................................. 39

7.1. Transaction Taxes ................................................................................................................................... 39

7.2. Withholding Taxes .................................................................................................................................. 39

7.3. Taxes on Disposal / Sale ....................................................................................................................... 40

8. Ranking and Fee Analysis ............................................................................................................................... 41

8.1. Ranking ..................................................................................................................................................... 41

8.2. Portfolio Cost Analysis ........................................................................................................................... 43

9. Federation of Bosnia and Herzegovina Factsheet ................................................................................... 45

9.1. Overview ................................................................................................................................................... 45


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9.2. Market Dynamics .................................................................................................................................... 46

9.3. Government Bond Auction Process ................................................................................................... 47

9.4. Corporate Bond Issuance ..................................................................................................................... 48

9.5. Trading ...................................................................................................................................................... 50

9.6. Settlement & Safekeeping .................................................................................................................... 51

9.7. Taxation .................................................................................................................................................... 52

9.8. Fee Analysis .............................................................................................................................................. 52

10. Republika Srpska Factsheet ........................................................................................................................... 54

10.1. Overview ................................................................................................................................................... 54

10.2. Market Dynamics .................................................................................................................................... 55



10.5. Trading ...................................................................................................................................................... 59


10.7. Taxation .................................................................................................................................................... 61

10.8. Fee Analysis .............................................................................................................................................. 61

11. Bulgaria Factsheet ........................................................................................................................................... 63

11.1. Overview ................................................................................................................................................... 63

11.2. Market Dynamics .................................................................................................................................... 64



11.5. Trading ...................................................................................................................................................... 69


11.7. Taxation .................................................................................................................................................... 70

11.8. Fee Analysis .............................................................................................................................................. 70

12. Croatia Factsheet ............................................................................................................................................. 72

12.1. Overview ................................................................................................................................................... 72

12.2. Market Dynamics .................................................................................................................................... 73



12.5. Trading ...................................................................................................................................................... 78


12.7. Taxation .................................................................................................................................................... 79

12.8. Fee Analysis .............................................................................................................................................. 79

13. Montenegro Factsheet ................................................................................................................................... 81


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13.1. Overview ................................................................................................................................................... 81

13.2. Market Dynamics .................................................................................................................................... 82



13.5. Trading ...................................................................................................................................................... 86


13.7. Taxation .................................................................................................................................................... 88

13.8. Fee Analysis .............................................................................................................................................. 88

14. North Macedonia Factsheet .......................................................................................................................... 90

14.1. Overview ................................................................................................................................................... 90

14.2. Market Dynamics .................................................................................................................................... 91



14.5. Trading ...................................................................................................................................................... 95


14.7. Taxation .................................................................................................................................................... 97

14.8. Fee Analysis .............................................................................................................................................. 97

15. Romania Factsheet .......................................................................................................................................... 99

15.1. Overview ................................................................................................................................................... 99

15.2. Market Dynamics ................................................................................................................................. 100

15.3. Government Bond Auction Process ................................................................................................ 101

15.4. Corporate Bond Issuance .................................................................................................................. 102

15.5. Trading ................................................................................................................................................... 104

15.6. Settlement & Safekeeping ................................................................................................................. 105

15.7. Taxation ................................................................................................................................................. 106

15.8. Fee Analysis ........................................................................................................................................... 106

16. Serbia Factsheet ............................................................................................................................................ 108

16.1. Overview ................................................................................................................................................ 108

16.2. Market Dynamics ................................................................................................................................. 109



16.5. Trading ................................................................................................................................................... 114


16.7. Taxation ................................................................................................................................................. 115

16.8. Fee Analysis ........................................................................................................................................... 115


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17. Slovak Republic Factsheet ........................................................................................................................... 117

17.1. Overview ................................................................................................................................................ 117

17.2. Market Dynamics ................................................................................................................................. 118



17.5. Trading ................................................................................................................................................... 123


17.7. Taxation ................................................................................................................................................. 125

17.8. Fee Analysis ........................................................................................................................................... 125

Appendix 1 – Data Table ...................................................................................................................................... 127

Appendix 2 – Bond Market Analysis Scoring Framework ............................................................................. 142

Appendix 3 – Bond Market Analysis Scores .................................................................................................... 145

Raw Scores .......................................................................................................................................................... 145

Weighted Scores ................................................................................................................................................ 148

Appendix 3 – Table of Figures ............................................................................................................................. 149


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1. Executive Summary

This report outlines the results of a study conducted into the comparative cost effectiveness and

issuance efficiency of eight countries in South-eastern and Central Europe (with a particular focus on

the Balkan region) (the “Study”). Bosnia and Herzegovina1, Bulgaria, Croatia, Montenegro, North

Macedonia, Romania, Serbia and the Slovak Republic were compared across over 300 different

factors to ascertain two things: 1) the cost effectiveness and efficiency of issuance of debt securities

(both by the government and by corporates); 2) the costs associated with trading and holding a

portfolio of debt securities.

In order to ensure a fair comparison and allow developments in markets to be tracked over time, a

set of standardised assumptions have been used throughout the Study. The cost effectiveness and

issuance efficiency of each market have then been scored on the basis of each of the metrics

included in the bond analysis framework (Appendix 2). Rankings are then obtained by sorting the

markets based on their scores.

Below are some of the key findings from the Study.

Cost Effectiveness

Government bond auction costs are primarily

derived from access to the electronic trading

system that manages the bid process and

settlement of these instruments. A number of

markets including North Macedonia, Romania and

Serbia, offer access to these systems for free

making them very cost effective. Other markets

that have developed their own systems, charge

auction participants between €1,800 and €3,700

per annum. The use of Bloomberg as the

auctioning system by both Croatia and the Slovak

Republic, where a single terminal costs over

€20,000 per annum, makes access to these

auctions expensive. Actual costs for bid

submission are free across most markets, with the

exception of Bulgaria, Montenegro and Romania.

There is a huge disparity in the issuance of a corporate bond between the markets assessed.

Issuance of a €50 million bond can cost between €9,900 in Bulgaria to €162,000 in Montenegro. The

largest cost for corporate bond issuance is shown to be the initial fees paid to regulators for the

approval of prospectuses, which tend to scale with the size of the issue. In addition, those markets

without fee caps have the propensity to be more expensive than markets that do. 1 Bosnia and Herzegovina (B&H) consists of two Entities, the Federation of Bosnia and Herzegovina and the Republika Srpska.

Both entities have organised and regulated capital markets and as a result, they have been assessed in the present report

separately.

Cost Effectiveness Ranking

Rank

1 Romania

2 Bulgaria

3 Serbia

4 North Macedonia

5 Bosnia and Herzegovina

(Federation of Bosnia and Herzegovina)


(Republika Srpska)

7 Croatia

8 Slovak Republic

9 Montenegro


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In general, bid offer spreads for both government and corporate bonds are high (relative to

developed markets), in many cases up to 250 bps or more. Spreads for government bonds tend to

be lower when trading OTC than trading on exchange, especially for government bonds. Conversely,

as the corporate bond market is still very small and illiquid (relative to the government bond market),

spreads between trading on exchange and OTC are very similar.

Trading transaction fees also showed great disparity across the markets surveyed. Stock exchange

transaction fees tend to be based on the transaction value rather than a flat fee. Both the Federation

of Bosnia and Herzegovina (B&H) and Montenegro charge fees that are more than 20 times the cost

of trading in the most cost effective market, Serbia. Only Serbia and the Slovak Republic cap fees

which limit costs. Brokerage costs also vary widely, ranging from 3 to 75bps.

Settlement costs also show a huge disparity between markets. CSD settlement costs are as little as

€0.31 in Bulgaria to €1,000 in North Macedonia. One of the key contributors to this dispersion is the

differences of fixed fees versus scaling fees and also the lack of caps for those markets that use a

scaling fee model. In most markets, custodian settlement fees tend to be low, and based on a fixed

fee scale, with the exception of the Republika Srpska (B&H) and Montenegro where fees tend to be

scaled.

Safekeeping fees ranged between €7,600 (Romania) and €81,000 (Federation of Bosnia and

Herzegovina, B&H) per annum. With the exception of the Federation of Bosnia and Herzegovina

(B&H) and Croatia, CSD safekeeping fees were under €700 per annum. Custody fees were as low as

3bps (€7,500) in Croatia and Romania, but as high as 28bps (€68,750) in the Federation of Bosnia

and Herzegovina (B&H).

Taxation plays a huge role in the overall cost to the trading and holding of a portfolio of bonds.

Taxation across the region is relatively harmonised. Withholding taxes generally ranged between 9%

and 12%. Certain markets, such as Bulgaria offer withholding tax exemptions for both government

and corporate bonds, making it attractive to own debt securities. A number of other markets

including North Macedonia, Serbia and the Slovak Republic offer exemptions for government bonds,

making these securities more attractive than corporate bonds. Taxes on disposal / sale tend to be

uniform across the markets surveyed, ranging from 7% in North Macedonia to 21% the Slovak

Republic. There are four markets (Croatia, North Macedonia, Romania and the Slovak Republic), that

provide lower disposition / sale tax levies on retail

investors, making it more attractive for this type of

investor.

Issuance Efficiency

Government bond auctions tend to be performed

by competitive tender, awarded at either the bid

price or a uniform minimum price (with the

exception of North Macedonia who operate

auctions on a non-competitive basis). The majority

of markets collect auction bids on the same day

and award securities on either the same day or the

following day. The main differentiating factor

between markets is the length of notice that is

given to market participants. This ranges from only

three days or less notice from markets such as

Issuance Efficiency Ranking

Rank

1 Bulgaria

2 Montenegro


(Republika Srpska)

4 Slovak Republic


(Federation of Bosnia and Herzegovina)

5 Croatia

7 North Macedonia

8 Romania

9 Serbia


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Croatia and Serbia, to over 14 days for the Slovak Republic. Short notice tends to make it more

difficult for market participants to build their books and formulate their strategies. This is particularly

unfavourable for retail investors.

Corporate bond issuance timelines vary greatly across all markets. However, consistently the

lengthiest stage in the process tends to be the approval of a prospectus by the local regulator.

Average approval times were between 10 and 60 days. Bulgaria was a particular stand out as this

market does not require a prospectus to be approved, or listed, which dramatically reduces the

administrative burden and time to issue. Only five markets provide the ability to register a shelf

prospectus, a process which enables issuers to more easily issue bonds on a regular basis.

Conclusions

The results of the analysis highlight a number of factors that every country should consider if they

wish for their bond markets to be more cost effective and issuance efficient.

- Either limit the use of expensive trading systems, or provide alternatives that are more cost

effective.

- Central securities depositories, stock exchanges and regulatory authorities should consider

introducing caps on scalable fees to encourage more cost effective issuance of corporate

bonds (especially for larger issues) and processing or settlement of bond trades.

- Taxation has a significant impact on overall portfolio costs. Providing tax incentives for

investing in debt securities, especially corporate bonds may be beneficial for investors and in

turn may provide additional stimulus for the issuance of corporate bonds across all markets.

- Government debt management offices / central banks should consider providing greater

consistency and notice to the market to facilitate greater participation from retail investors.

- Regulators should consider providing template prospectus’ which can be used as

benchmark. If these templates are adopted, it would enable the quicker approval of bond

issues. Similarly, having the ability to register a shelf prospectus can significantly reduce the

approval time for regular issuers.


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2. Introduction

2.1. Purpose of this Report

This report outlines the results of the comparative study of transactions costs and timing for issuance,

listing and trading of locally issued debt securities in selected countries in South-eastern and Central

Europe, with a particular focus on a number of Balkan countries. These included Bosnia and

Herzegovina, Montenegro, North Macedonia and Serbia1. Bulgaria, Croatia, Romania and the Slovak

Republic have also been analysed as reference or control markets in neighbouring jurisdictions

employing the same methodology. The objectives of the study are to:

a) Develop a comprehensive framework to assess the cost of issuing and transacting in local

currency securities, with particular focus on corporate bonds.

b) Develop a framework for assessing the length of time taken to issue both government and

corporate bonds.

c) Utilise the assessment framework which allows each country to benchmark themselves

against other emerging economies from the region which can also enable each country’s

progress to be tracked over time.

d) Present the results of the study in a clear and easily comparable format.

e) Act as a follow-up and provide an update to the study conducted by the EBRD in 2015 with

the support of the EBRD Special Shareholder Fund2.

It is envisaged that this report will be rolled out across the EBRD regions and it will constitute an

effective tool in issues surrounding local capital market development.

2.2. Benchmarking & Comparison Framework

Until now it has not been possible to objectively compare each market and the cost of bond

issuance and trading nor the temporal factors around issuance on a relative basis. To address these

issues and provide further transparency on each market, this paper outlines a quantitative approach

to objectively assess each country’s cost effectiveness and issuance efficiency. In order to perform

this assessment, there are two key things required: 1) a set of standardised models (model portfolio

and issuer) to ensure that each market is being compared on equal terms; 2) a framework that

captures key metrics and provides an objective comparison.

1 It should be noted that Albania and Kosovo were not included due to the nascent nature of both their capital markets.

Albania has no Central Securities Depository (CSD) and a limited Stock Exchange. Equally, Kosovo has no CSD nor a Stock

Exchange and its regulatory structure for the issuance of corporate bonds. Both of these capital market structures provide an

unfavourable / inequitable grounds for comparison and thus both countries have been excluded from the study. 2 The study, performed in 2015, covered 11 markets across Central and Eastern Europe and Central Asia, including Georgia,

Hungary, Jordan, Kazakhstan, Morocco, Poland, Romania, Russian Federation, Serbia, Slovak Republic and Turkey.


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Standardised Models

The standardised models provide a simulation of the characteristics of both a model issuer and

model portfolio which will serve as the basis of comparison. Details of the models are outlined in

sections 2.3 and 2.4 below.

It is important to note that all figures shown in this report are based on the details outlined in the

models.

The Framework

The framework constructed for this study, enables the analysis of each country relative to each other

and both quantify the costs of issuance and trading in each country.

In order to assess each country, we will analyse a number of key factors including:

— government bond auction fees;

— corporate bond issuance fees;

— direct and indirect trading costs;

— settlement and safekeeping costs;

— taxation of transactions, income and capital gains;

— timelines for issuance of both government and corporate bonds.

Utilising the quantitative framework it is possible to rank countries against each other using this

objective scoring methodology. Although understanding the framework score will be a critical factor

in benchmarking one country against another, it does not by itself tell the entire story. It is also

important to show the actual costs and timelines in each country.

A full description of this framework and the factors that it includes are outlined in Appendix 2. The

construction of this framework is derived from analysis of a number of developed and emerging

countries and the analysis that was conducted in the previous assessment.

2.3. Model Portfolio

Total Value (AUM) Portfolio Allocation

€25,000,000

Other Statistics

50%50%

Government Bonds

Corporate Bonds


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Number of Securities 10

Average Security Size €2.5mn

Average trade size €1mn

Average number of transactions (per annum) 50

Running Yield 4%

Coupon Income (per annum) €1mn

Profit on trades (per annum) €1mn

Bonds Maturing (per annum) 2

This is an actively managed portfolio and it also assumes that the investment manager requires two

staff to have access to trade and manage the portfolio.

2.4. Model Issuer

Company XYZ

Is a listed company and has an existing credit rating but has no outstanding bonds in issue. The

company will be issuing either:

Small Issue Large Issue

€5,000,000 €50,000,000

It is assumed this will be the first time the company’s bonds are issued and listed on the local stock

exchange (in the primary market). It is also assumed that there will be 100 bondholders subscribed

to the issue.

2.5. Getting the Most from this Report

As there are over 300 pieces of data examined for each country, there is a great deal of information

to compare and contrast. In order to make it easier for you the reader to digest, we have structured

this report in the following way to assist you in your understanding of the study’s results.

- Comparative Analysis – Sections 3 to 8 provide you with a summary of some of the key

elements of the Study’s results, along with some high level analysis on the differences

between the markets. It should be noted that there are many nuances and details which, for

the sake of brevity (and to avoid repetition), have been excluded from these sections.

However, more detailed information on each market can be found in the individual country

factsheets.

- Country Factsheets – Sections 9 to 17 present all of the information gathered in a

standardised format and provide the most comprehensive overview of each market. There is

a great deal more detail in these sections than in the comparative analysis sections.

- Raw Data – For those who would like to see all the data in its raw form, section 0 is a large

data table which shows all the data collected from our research and analysis.


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- Analysis Framework and Scores – As outlined above in section 2.2, the data gathered has

been used to score each of the markets in terms of cost effectiveness and issuance

efficiency. Appendices 2 and 3 show both the underlying framework that was used to

calculate these scores, and also the scores themselves in their raw format.

Other things to Note

There are a few other things to note that will further help your understanding of the data in this

report:

- Keep the models in mind at all times – As has been outlined above, the models provide

the basis that has been used to aid comparison. All of the cost and timeline numbers

outlined in this report are quoted in reference to the characteristics of the model issuer or

portfolio (as outlined in sections 2.3 and 2.4 above).

- Blanks are intentional – As a standardised format for each market has been used, there

are number of occasions where either there is no data, or the particular category / criterion

is not present in that market. In these circumstances the field in this report may be left blank

(in some cases with a grey fill).

- Footnotes provide additional clarity / nuance - Whilst all information is presented in a

standardised format, each section will contain a number of footnotes which will provide

further explanation not only on the source of the data, but on some of the important

nuances of each market. For example, where we have shown a fee for a bond issuance in

Euro terms, the actual fee structure which underlays this may have been calculated using a

mixture of a flat fee and percentage of the size of issuance. These nuances will be explained

in the footnotes.

- All monetary values are displayed in Euro – For the ease of comparison, all monetary

values throughout this report have been converted to Euro at a single rate. Where

necessary, details of the values in local currency may be provided in footnotes.


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3. Market Dynamics

3.1. Bond Yields

Figure 1: Government Bond Yield Curves

Federation of Bosnia and

Herzegovina (B&H)3

Republika Srpska (B&H) Bulgaria

Croatia Montenegro North Macedonia4

Romania Serbia Slovak Republic

As highlighted in Figure 1, there is a large variation in the government bond yield curves between all

of the markets studies. Although the majority of the markets have regular issues of debt at the short

end of the curve (i.e. 1 – 5 years), the long end of the curve in many markets remains sparse. This is

3 As most government bonds are traded OTC we have not been able to collect reliable data on yields. 4 As most government bonds are traded OTC we have not been able to collect reliable data on yields.

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

Yield

Maturity

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2 5 7 10 30-0.6%

-0.5%

-0.4%

-0.3%

-0.2%

-0.1%

0.0%

0.1%

0.2%

0.3%

0.4%

2 5 7 10 30

-1.0%

-0.8%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

2 5 7 10 30

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2 5 7 10 30

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2 5 7 10 30

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2 5 7 10 30

-0.8%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1 5 7 10 30


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especially significant in local currency debt (as opposed to Eurozone markets5), where this has a

particular impact on both pensions and insurance investors who may find it difficult to match long-

term liabilities with the current stock of bonds available. It should also be noted that in both the

Federation of Bosnia and Herzegovina (B&H) and North Macedonia, there are government bonds in

issue, however, the majority of these bonds are traded Over the Counter (OTC) and therefore there

is little public price discovery, which has made it difficult to construct a representative yield curve.

Figure 2: Corporate Bond Yield Curves


Herzegovina6 (B&H)

Republika Srpska (B&H) Bulgaria

Croatia Montenegro North Macedonia7


5 Investors who have their liabilities in Euros and not a local currency are able to use longer dated Euro denominated bonds

from other markets, which makes the issue described above less acute. 6 As most corporate bonds are traded OTC we have not been able to collect reliable data on yields. 7 As most corporate bonds are traded OTC we have not been able to collect reliable data on yields.

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

Yield

Maturity

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2 5 7 10 30

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2 5 7 10 30

-1.0%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

2 5 7 10 30

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2 5 7 10 30

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2 5 7 10 30

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2 5 7 10 30


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With the exception of the Slovak Republic, corporate bond markets across all the markets covered

remain relatively underdeveloped (especially for those that are listed). Figure 2 shows that, similarly

to the government bond market, the yield curves are skewed heavily towards the short end of the

curve, with very few bonds issued with more than a seven year maturity.

In most of the markets there is still a heavy reliance on bank loans to finance growth and there has

been a reluctance to use capital markets for debt issuance. Whilst it is difficult to pin-point the exact

cause of this, the main reasons cited have been: 1) the cost of issuance; 2) the administrative /

operational burden of issuance; 3) the requirements for transparency / disclosure; 4) the lack of

engagement by the public with capital markets; 5) the ease and abundance of bank financing.

Although the Study focuses primarily on points 1 and 2 (and to a lesser extend 3), if an increase in

both the volume and frequency of corporate bond issuance is desired then a more holistic review of

the other factors outlined above would also be desirable.

3.2. Listing Requirements

Figure 3: Stock Exchange Listing Requirements

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (B

&H

)

Re

pu

bli

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Srp

ska

(B

&H

)

Bu

lga

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Cro

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a

Mo

nte

ne

gro

No

rth

Ma

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on

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Ro

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Se

rbia

Slo

va

k R

ep

ub

lic

Government Bonds

Corporate Bonds

With the exception of the Federation of Bosnia and Herzegovina (B&H) and Montenegro, none of the

other markets have any requirements for bonds to be listed on the local stock exchange (Figure 3). It

should be noted that in some markets, such as Serbia, there are now agreements between the local

stock exchange and the Ministry of Finance / Debt Management Office to list a certain number of

bonds for public sale. These are efforts to provide a boost to the liquidity of the markets and provide

greater price transparency.


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3.3. Size of Bond Market

There is a large disparity in size, between the different bond markets. As can be seen inFigure 4 and

Figure 5 below the Slovak Republic, Serbia, Romania and Croatia (in order of size) have the

significantly larger amount of bonds outstanding than the other markets in this study. For all of these

markets, the vast majority of debt market issuance is by the government. In the corporate space, the

largest issuers (especially in Romania) tend to be government owned, but partly privatised, utilities

such as oil and gas companies, power generation and distribution, telecoms, seaports and airports.

Figure 4: Listed Bonds Outstanding (€mn)

Figure 5 and Figure 6 show, the majority of bond issuance tends to be in local currency (the Slovak

Republic having Euro as their local currency). There are, however, an increasing number of bonds

issued in Euro, a trend which has gained momentum particularly in the Romanian corporate bond

sector, where there has been an increasing desire for issuers to appeal to broader investor bases.

Figure 5: Listed Government Bonds Outstanding by Issuance Currency (€mn)

Fe

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rati

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of

Bo

snia

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d

He

rze

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vin

a (B

&H

)

Re

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bli

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Srp

ska

(B

&H

)

Bu

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Cro

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a

Mo

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gro

No

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on

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Ro

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Slo

va

k R

ep

ub

lic

Local Currency 593 557 2,103 8,929 1,056 10,995 8,110

EUR 669 5,535 309 49 4,150 34,339

Other

Total 593 557 2,772 14,464 309 1,105 10,995 12,260 34,339

It should be noted that there are no government bonds issued in any other currency than Euro, and

we found no evidence of any US Dollar denominated debt. With the exception of a small issuance in

the Slovak Republic, all debt was denominated in either local currency or Euro (Figure 6), with the

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)

Bulgaria Croatia Montenegro North

Macedonia

Romania Serbia Slovak

Republic

Mill

ion

s

Total Listed Government Bonds Outstanding Total Listed Corporate Bonds Outstanding


19

Bulgarian market showing a significant preference for the issuance of corporate debt in Euro over

Lev (BGN).

Figure 6: Listed Corporate Bonds Outstanding by Issuance Currency (€mn)

Fe

de

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on

of

Bo

snia

an

d

He

rze

go

vin

a (B

&H

)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

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gro

No

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ced

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ma

nia

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va

k R

ep

ub

lic

Local Currency 61 4 130 476 2,493

EUR 841 69 14 5 2,038 2,338

Other 33

Total 61 4 971 546 14 5 4,531 2,371

3.4. Bond Market Trading

There is a strong trend across all markets for the majority of both government and corporate bonds

to be traded Over-the-Counter (OTC), primarily between institutional counterparties. This has

resulted in low trading volumes for bonds over the exchange. Romania is the exception to the trend,

having the largest amount of trading, primarily in corporate bonds (see Figure 7).

Figure 7: Bonds Traded on the Stock Exchange in 2018 (€mn)

0

500

1,000

1,500

2,000

2,500

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic

Mill

ion

s

Total Traded Government Bonds on Stock Exchange Total Traded Corporate Bonds on Stock Exchange


20

Figure 8: Government Bonds Traded on the Stock Exchange in 2018 by Issuance Currency

(€mn)

Fe

de

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on

of

Bo

snia

an

d

He

rze

go

vin

a (B

&H

)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

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Slo

va

k R

ep

ub

lic

Local Currency (LCY) 13 155 13 74 130 335

EUR 12 21 3 9 0 130

Other

Total 13 155 25 95 3 9 130 465

There are a number of markets (Montenegro, North Macedonia and the Slovak Republic) where

government bonds are not traded via the stock exchange and are only traded OTC. For other

markets the trading of government bonds on exchange remains very thin. As


21

Figure 8 shows, Serbia has the highest value of government bonds traded in 2018, which was partly

a result of an agreement between the Bratislava Stock Exchange and the Serbian Ministry of Finance

to list government bonds on the exchange.

Figure 9: Corporate Bonds Traded on the Stock Exchange in 2018 by Issuance Currency (€mn) F

ed

era

tio

n o

f B

osn

ia a

nd

He

rze

go

vin

a (B

&H

)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

rbia

Slo

va

k R

ep

ub

lic

Local Currency (LCY) 2 9 3 2,024

EUR 17 1 1 5 464

Other

Total 2 26 4 1 2,029 464

Only three markets have been identified to have explicit currency restrictions. Montenegro and

Romania have regulations which prohibit the issuance of bonds in anything other than the local

currency or Euro. Serbia also has restrictions, as they require the issue of a bond in any foreign

currency to be approved by the National Bank of Serbia. Whilst this is not an explicit prohibition, it

does provide an extra administrative hurdle for an issuer that wishes to issue a bond in a currency

other than the Serbian Dinar (RSD).


22

4. Primary Market

4.1. Government Bond Auction Type and Frequency

Government bond auctions have a clear tendency to be competitive tenders (Figure 10), however

there is an equal split between those that are provided at a Bid Price (Dutch-Style) or at a Uniform

Minimum Price.

Figure 10: Auction Type Matrix

Fe

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Bo

snia

an

d

He

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vin

a (B

&H

)

Re

pu

bli

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Srp

ska

(B

&H

)

Bu

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Cro

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a

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Competitive Tender Award at

Bid Price (Dutch-Style Auction)

Competitive Tender Award at

Uniform Minimum Price

Ad Hoc (Non-Competitive

Tender)

Auctions tend to be regularly scheduled (Figure 11), but there is a great deal of variation between the

different countries regarding the length of time between each auction ranging from every week

(Bulgaria) to once every three months (Federation of Bosnia and Herzegovina (B&H)).

Figure 11: Auction Scheduling Type Matrix

Fe

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on

of

Bo

snia

an

d

He

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vin

a (B

&H

)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

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a

Mo

nte

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gro

No

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Ma

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on

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Ro

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k R

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Timetabled (regular)

Ad hoc (irregular)

Figure 12 below shows the total number of days that are taken to conduct an auction. It includes the

number of days before which the market is notified of the particulars of the issue to be auctioned

(i.e. the size of the issue, coupon, maturity, type / structure), the time given to submit bids, and the

time it takes to award (i.e. settle) the securities with the bidders.


23

Figure 12: Total Number Days to Conduct and Auction (Chart and Data Table)

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (B

&H

)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

rbia

Slo

va

k R

ep

ub

lic

Average Number of Days to

Conduct an Auction 14 12 11 4 13 8 10 6 16

The auction timelines are relatively similar across all countries. In general, bids are collected on a

single day and awarded either the same or following day. There are however, a number of

differences in terms of the notice provided prior to an auction. In general, is best practice to provide

sufficient notice prior to each auction, to enable market participants to aggregate orders (especially

for banks acting on behalf of institutional or retail clients) and formulate their bidding strategy8. One

clear theme that was highlighted in the study is that there is often very little notice given for market

participants to prepare for an auction. Croatia and Serbia on average gave 3 days or less notice to

market participants, whereas the Slovak Republic gave the longest notification time which was on

average 14 days to the market.

8 It should be noted that the analysis framework provides a higher score to those markets that provide a longer notice period

prior to a bond auction.

- 2 4 6 8 10 12 14 16 18

Croatia

Serbia

North Macedonia

Romania

Bulgaria

Republika Srpska (B&H)

Montenegro


Herzegovina (B&H)

Slovak Republic

Days


24

4.2. Government Bond Auction Costs

In order to calculate government bond auction costs, this study has assessed the cost of two primary

factors; 1) systems access cost; 2) bid submission fees. Settlement, and safekeeping fees have been

analysed separately in section 6 below.

As shown in Figure 13, North Macedonia, Romania and Serbia are by far the most cost effective

markets in terms of the purchase of government bonds at auction. There are no costs to access

either the trading systems, or for bid submission.

Figure 13: Auction Processing System Cost Chart9

Figure 14: Auction Processing System Matrix

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

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Slo

va

k R

ep

ub

lic

Is there an Electronic Auction

Processing System

Electronic Auction Processing

System Cost to user (€) 2,761 1,841 3,681 43,132 3,000 0 0 0 43,132

Fees paid for bid Submission (€) 0 0 503 0 500 0 2.22 0 0

Bond auction costs tend to be minimal, with the majority of costs coming from access to the bond

auctioning system rather than a cost for bid submission (Figure 14). It should be noted that both

Croatia and the Slovak Republic require bids to be submitted via the Bloomberg platform.

Bloomberg terminals are expensive, relative to the other bid submission platforms assessed in this

study, with an annual fee of over $24,000 per terminal. As part of the models, we have looked at the

9 Assumes an organisation has two users

€0€5,000

€10,000€15,000€20,000€25,000€30,000€35,000€40,000€45,000€50,000

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic


25

cost for two users having access (to take account of instances where there are tiered fees), which

makes the cost for both Croatia and the Slovak Republic high.

It should however be noted, that the Bloomberg system has much greater utility than just bid

submission. This does also create a bias towards using Bloomberg for those other purposes and

makes other comparable systems (such as Thompsons Reuters, FactSet, Capital IQ etc.) less

competitive in those markets.

4.3. Corporate Bond Issuance Structure

The requirements for corporate bond issuance tend to be fairly uniform across markets. The

majority of markets, with the exception of Bulgaria and Serbia, require a prospectus to be approved

by the regulator (Figure 15). No countries have a requirement for a bond to be rated (whether it is

listed or not) and as a consequence, there are very few bonds (with the exception of the Slovak

Republic) that have a credit rating. Although administratively this makes the process quicker, there

are potential negative impacts as many cross boarder investors require / desire a credit rating in

order to invest.

Figure 15: Corporate Bond Issuance Requirements Matrix

Fe

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Bo

snia

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d

He

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go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

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on

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S L S L S L S L S L S L S L S L S L

Prospectus

Approval

Credit Rating

Listing

Other

Requirements

*Please note that in the above table “S” indicates a small bond issue, and “L” indicates large bond issue.

A number of other processes were identified as requirements in order to issue corporate bonds in

North Macedonia, Romania, Serbia and the Slovak Republic. Whilst there are a number of procedural

differences (which are outlined below in the various factsheets), in general there was an additional

requirement to have the bond issue and its prospectus approved at a company general meeting.

No procedural differences were identified between a small and large bond issue. Therefore, there

are no procedural dispensations for smaller issues, which would for example require less regulatory

scrutiny for a smaller issue size.


26

Figure 16: Average Number of Days to Issue a Corporate Bond (Chart and Matrix)

Fe

de

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on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

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gro

No

rth

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Total Number of Days 30 23 5 65 22 82 70 76 40

Issuance timelines vary greatly between each market. The longest amount of time in the process is

the prospectus approval by the regulator, which can vary on average anywhere between 10 and 60

days. It should be noted that there were often discrepancies between the intended turnaround time

stated by the regulator and the experience of the market participant respondents.

Listing processes tend to be shorter than prospectus approval, and range between five and thirty

days.

Bulgaria has a significantly streamlined process, as there are no requirements for corporate bond

prospectuses to be approved, nor are there any listing requirements. However, even in the case

where a company does choose to list, market participants have indicated that the approval process

takes on average 5 days. This makes Bulgaria by far the most efficient market for the issuance of

corporate bonds.

Five of the nine markets assessed, Republika Srpska (B&H), Croatia, Montenegro, Romania and the

Slovak Republic provide the facility to register a shelf prospectus, which in turn can significantly

speed up the process for those issuers that wish to issue bonds on a regular basis.

4.4. Corporate Bond Issuance Fees

Corporate bond issuance fees are calculated based on the model issuer criteria. These numbers

include all fees from each markets’ regulator, CSD and Stock Exchange for the issuance of bonds. It

should be noted that these included both initial fees and one year of maintenance fees (if there are

any).

- 10 20 30 40 50 60 70 80 90

Bulgaria

Montenegro

Republika Srpska (B&H)

Federation of Bosnia and Herzegovina (B&H)

Slovak Republic

Croatia

Romania

Serbia

North Macedonia

Days


27

Figure 17: Total Corporate Bond issuance Fees - Chart and Table (€)

Fe

de

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on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

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nte

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gro

No

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lic

Small Issue (€) 7,992 10,550 1,585 5,911 24,715 9,470 3,776 11,752 16,157

Large Issue (€) 11,395 81,100 1,585 9,961 162,265 78,316 26,276 108,752 44,593

As can be seen from Figure 17, Bulgaria has the lowest cost for the issuance of corporate bonds

across all of the markets assessed in this study. This is partly due to the fact that the Financial

Supervision Commission in Bulgaria is supporting capital markets by providing an amnesty on any

approval fees (until the end of 2020), and that both the Bulgarian Stock Exchange and the Central

Depository AD both have caps for the fees associated with the issuance of corporate bonds. This

combination of factors provides a more attractive environment for potential issuers in that market.

Prospectus approval, for the majority of countries, has an element of fee that scales with the size of

the issue. There are a number of markets that have maximum fee caps, to ensure that fees are not

commercially excessive. Montenegro, has no fee caps for any of the entities involved which in turn

means that bond issuance fees can be quite large at each stage of the process. The Republika

Srpska (B&H), Croatia, Montenegro, North Macedonia and Serbia have no caps on prospectus

approval fees and often have fees which scale with the size of the issue, which in many instances can

lead to large fees.

Depository fees also varied in format. There are a number of markets that have fees, which scale

with the size of the issue. There are also a number of markets that scale their fees based on the

number of bondholders that have subscribed to the issue, which is in large part due to the legacy of

mass privatisation. This has created a large amount of account owners which are difficult to maintain

and charge and therefore has required depositories to create commercial models which focus on

charging the issuer rather than the account holder.

€0

€20,000

€40,000

€60,000

€80,000

€100,000

€120,000

€140,000

€160,000

€180,000

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic



28

Figure 18 and Figure 19 below provide further details on the breakdown of the issuance costs

between initial fees paid to the regulator, stock exchange, and CSD and those which are paid on an

ongoing basis. Ongoing fees show the cost of issuance to the issuer for one year of issue.

Figure 18: Small Corporate Bond Issuance Cost Breakdown – Chart and Table (€)

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

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Se

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k R

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lic

Initial Issuance fees (€) 6,242 8,425 1,074 3,781 16,715 8,820 3,227 11,252 6,157

Ongoing Fees (€) 1,750 2,125 511 2,130 8,000 650 549 500 10,000

Total Cost (€) 7,992 10,550 1,585 5,911 24,715 9,470 3,776 11,752 16,157

Figure 19: Large Corporate Bond Issuance Cost (€)

€0

€5,000

€10,000

€15,000

€20,000

€25,000

€30,000

Bulgaria Romania Croatia Federation of

Bosnia and

Herzegovina

(B&H)

North

Macedonia

Republika

Srpska (B&H)

Serbia Slovak

Republic

Montenegro

Initial Issuance fees (Small Issue) Ongoing Fees (Small Issue)

€0

€20,000

€40,000

€60,000

€80,000

€100,000

€120,000

€140,000

€160,000

€180,000

Bulgaria Croatia Federation of

Bosnia and

Herzegovina

(B&H)

Romania Slovak

Republic

North

Macedonia

Republika

Srpska (B&H)

Serbia Montenegro

Initial Issuance fees (Large Issue) Ongoing Fees (Large Issue)


29

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

rbia

Slo

va

k R

ep

ub

lic

Initial Issuance fees (€) 8,895 76,100 1,074 7,831 151,765 77,666 25,727 105,352 34,593

Ongoing Fees (€) 2,500 5,000 511 2,130 10,500 650 549 3,400 10,000

Total Cost (€) 11,395 81,100 1,585 9,961 162,265 78,316 26,276 108,752 44,593


30

5. Secondary Market

5.1. Trading Systems

This section examines the cost of accessing the secondary market for both government and

corporate bonds. It looks at the cost for access to the stock exchange trading systems and, if it

exists, any Alternative Trading Systems (ATS) that may provide competition and potentially offer

additional cost efficiency.

Figure 20: Trading Systems Availability Matrix

Fe

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vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

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No

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on

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G C G C G C G C G C G C G C G C G C Stock Exchange

Trading system

Alternative

Trading Systems

*Please note that in the above table “G” indicates that government bonds can be traded, and “C” indicates corporate bonds

can be traded.

All markets in the study offer electronic trading access to the local stock exchange, which can

support the trading of both government and corporate bonds. There are however, few ATS trading

systems available. Bulgaria offer an ATS for government bonds that is managed directly by the

National Bank of Bulgaria. In Romania, there is an ATS also provided by the Bucharest Stock

Exchange which can trade only corporate bonds. In both Serbia and the Slovak Republic, the ATS

identified by market participants is Bloomberg’s eBond system. As stated above, this system can be

quite expensive, but does provide other ancillary benefits.

Figure 21: Trading Systems Cost – Chart and Table (€)

€0€1,000€2,000€3,000€4,000€5,000€6,000€7,000€8,000€9,000

€10,000

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic

Stock Exchange Alternative Trading System


31

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

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Ro

ma

nia

Se

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Slo

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k R

ep

ub

lic

Stock Exchange (€) 2,147 3,681 1,176 520 8,000 2,400 320 0 0

Alternative Trading System (€) 3,681 43,132 43,132

As Figure 21 shows, whilst these ATS’ may provide additional benefits, none are more cost effective

than using the stock exchange’s trading system. It should also be noted that both Serbia and the

Slovak Republic do not charge any fees for access to the stock exchange’s trading system.

5.2. Indirect Costs - Spreads

Whilst direct costs are a key component of any transaction, when looking at a portfolio that is actively

traded, the indirect cost of the bid / offer spread can also be a significant indirect cost (especially in

markets that are less liquid).

Figure 22: Publicly Traded Government Bond Spreads – Chart and Table (bps)

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

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Ro

ma

nia

Se

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lic

Average Spreads High (bps) 40 16 183 100 100 14 12 16 250

Average Spread Low (bps) 18 8.8 143 17 51 6 2 2 101

0

50

100

150

200

250

300

350

400

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic

bps


32

There is a great deal of variation in average government bond spreads between the markets

assessed (Figure 22). Those markets with greater liquidity and a larger number of active institutional

investors, which includes Bulgaria, Croatia, and the Slovak Republic, tend to show larger spreads.

Markets in which government bonds are predominantly buy-and-hold instruments and where much

of the trading is done OTC, such as Republika Srpska (B&H), North Macedonia, Romania and Serbia,

tend to have much tighter average spreads across the entire yield curve.

Figure 23: Publicly Traded Corporate Bond Spreads - Chart and Table (bps)

Fe

de

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on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

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gro

No

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Ma

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on

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lic

Average Spreads High (bps) 50 50 250 80 250 50 250

Average Spread Low (bps) 20 20 101 41 101 21 101

Given both the scarcity of corporate bonds across the markets covered and the fact that the

majority of bonds are either unrated or have a low credit rating, it is unsurprising that spreads are

wider for these instruments across all markets (Figure 23). This is also partially compounded by the

fact that the majority of these bonds are traded on exchange and would therefore have greater

price transparency.

Neither North Macedonia nor Serbia have any traded corporate bonds at the time of this analysis.

Figure 24: OTC Government Bond Spreads – Chart and Table (bps)

0

50

100

150

200

250

300

350

400

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic

bps

0

50

100

150

200

250

300

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic

bps


33

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

10

Re

pu

bli

ka

Srp

ska

Bu

lga

ria

Cro

ati

a

Mo

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11

No

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Average Spreads High (bps) 16 183 100 14 8 16 110

Average Spread Low (bps) 9 39 17 6 0 2 49

OTC spreads on government bonds have a tendency to be slightly lower than traded spreads across

the markets assessed (Figure 24). Whilst the variation at the high end is negligible, there is a

consistent theme which shows that investors often can find better prices off exchange.

Figure 25: OTC Corporate Bond Spreads (bps)

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Average Spreads High (bps) 50 250 80 40 250

Average Spread Low (bps) 20 101 41 17 101

Conversely, on the corporate bond side of the market, there is little, if no difference between trading

OTC and on exchange. Whilst it is unclear from market participants why this is so, it is surmised that

it could be partially due to the price transparency and efficiency that is created when bonds are

listed.

10 The Federation of Bosnia and Herzegovina (B&H) do not allow government bonds to be traded OTC 11 Montenegro do not allow government bonds to be traded OTC

0

50

100

150

200

250

300

350

400

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


bps


34

5.3. Trading Transaction Fees

This section looks at the direct costs associated with the trading of both government and corporate

bonds. Specifically, this part of the analysis reviews the costs associated with transactional fees from

both the stock exchange and through use of brokers / banks.

Figure 26: Direct Trading Fee Cost Per Transaction – Chart and Table (€)

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Stock Exchange Fee per

Transaction (€) 1,000 200 100 300 900 250 70 43 332

Brokerage Fees per

Transaction (€) 3,500 2,000 750 1,000 1,750 7,500 2,500 300 700

Total Fees per Transaction (€) 4,500 2,200 855 1,300 2,650 7,750 2,670 343 1,032

Stock exchange transaction fees tend to be based on the value of the transaction, rather than a fixed

cost per trade. As Figure 26 shows, there is great disparity of stock exchange trading fees across the

markets assessed. Both the Federation of Bosnia and Herzegovina (B&H) and Montenegro have the

highest stock exchange trading fee costs, as they charge 10 and 9bps respectively for each

transaction, which is more than 20 times the cost of trading in the most cost effective market, Serbia.

Additionally, only Serbia and the Slovak Republic stock exchanges cap fees, which provides additional

benefits to larger institutions who wish to trade.

Brokerage fees are not only the largest component of direct trading fees, but tend to vary greatly

between the markets assessed. Figure 26 shows that Serbia is the most cost effective market based

on this metric, with average brokerage fees of only 3bps of transaction value. Whereas, North

Macedonia is the most expensive market, with brokerage fees up to 75bps for large transactions12.

12 Please refer to the section 14.5 for further information on the brokerage fees in North Macedonia

€0

€1,000

€2,000

€3,000

€4,000

€5,000

€6,000

€7,000

€8,000

€9,000

Serbia Bulgaria Slovak

Republic

Croatia Republika

Srpska (B&H)

Montenegro Romania Federation of

Bosnia and

Herzegovina

(B&H)

North

Macedonia

Stock Exchange Fee per Transaction Brokerage Fees per Transaction


35

This dispersion of fees tends to be due to the number of participants in the market and therefore

the competition (or lack thereof) for brokerage services. In addition, in those markets where liquidity

is particularly thin, brokerage often also requires additional efforts in finding willing buyers / sellers in

quite shallow institutional and retail markets. This additional operational cost, may also be a key

contributor to the higher cost to trading clients in these circumstances.


36

6. Settlement and Safekeeping

6.1. Settlement

Settlement fees assessed in this section are broken down into two parts, CSD clearing and

settlement and custodian settlement fees. Figure 27 below outlines the breakdown between these

two components of settlement fees across the markets assessed.

Figure 27: Settlement Fees Per Transaction – Chart and Table (€)

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(B

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CSD Clearing and Settlement

Transaction Fees (€) 830 150 0.31 14.00 300 1,000 32.00 13.75 8.20

Custodian Settlement Fees (€) 25.00 1,500 10.00 22.50 1,000 16.00 21.00 100 16.60

Total 855 1,650 10.31 36.50 1,300 1,016 53.00 113.75 24.80

There is a large disparity in cost between the different markets when assessing settlement fee

metrics. Those markets with the lowest volume of trades, the Federation of Bosnia and Herzegovina

(B&H), the Republika Srpska (B&H), Montenegro, and North Macedonia have the greatest total cost

for settlement. Whereas, those markets with much higher frequency and trading volume, Bulgaria,

Croatia, Romania and the Slovak Republic, have significantly lower settlement costs. Serbia, whilst it

has low trading volumes, has engineered costs that are more in line with more advanced markets.

€0

€200

€400

€600

€800

€1,000

€1,200

€1,400

€1,600

€1,800

Bulgaria Slovak

Republic

Croatia Romania Serbia Federation of

Bosnia and

Herzegovina

(B&H)

North

Macedonia

Montenegro Republika

Srpska (B&H)

CSD Clearing and Settlement Transaction Fees Custodian Settlement Fees


37

6.2. Safekeeping

In addition to assessing costs directly attributable to trading activity, this study has also assessed the

cost of holding a portfolio of bonds in each of the markets. Figure 28 shows an overview of the

ongoing safekeeping fees for holding the model portfolio over a single year period.

Figure 28: Safekeeping Fees Per Annum – Chart and Table (€)

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CSD Safekeeping Fee (€) 12,500 153 47 2,500 0 50 178 642 450

Custodian Safekeeping

Fees (€) 68,750 25,000 12,500 7,500 25,000 50,000 7,500 25,000 27,500

Total (€) 81,250 25,153 12,547 10,000 25,000 50,050 7,678 25,642 27,950

It is important to note that for CSD safekeeping fees, there are a variety of commercial models that

charge bondholders for the assets that they have on account over time. As outlined above, due to

the structures that were put in place during the mass privatisation processes that took place in a

number of countries largely between 1990 and 2010, there are a large number of accounts held with

the CSD that they are unable (either practically or due to legal reasons) to charge in a traditional

manner (i.e. a percentage of the value of the assets held). As a consequence, fee structures, such as

taking percentages of coupons, or on payment of principal or charging issuers’ fees for the number

of bondholders have been used to make their services commercially viable. Markets such as North

Macedonia and Croatia employ these methods. However, further details are provided in each

country factsheet.

€0

€10,000

€20,000

€30,000

€40,000

€50,000

€60,000

€70,000

€80,000

€90,000

Romania Croatia Bulgaria Montenegro Republika

Srpska

(B&H)

Serbia Slovak

Republic

North

Macedonia

Fed BiH

CSD Safekeeping Fee Custodian Safekeeping Fees


38

In general, CSD safekeeping fees are all nominal, with the exception of the Federation of Bosnia and

Herzegovina (B&H) who has the largest fees for safekeeping among the markets assessed.

Custodian safekeeping fees see much less disparity from the majority of the markets assessed. The

most cost effective markets for custody are Croatia and Romania where fees are on average 3bps of

portfolio value. The most expensive market was the Federation of Bosnia and Herzegovina (B&H)

where safekeeping fees averaged around 28bps; significantly more than all other markets assessed.


39

7. Taxation

7.1. Transaction Taxes

Research was conducted on taxes on the purchase of bond securities. Examples of this would

include sales tax, value added tax or stamp duty.

No transaction taxes were identified in any of the markets assessed.

7.2. Withholding Taxes

Withholding taxes include any tax that would be deducted at source (or paid) on any coupon

accruing from the holding of a bond. It should be noted that the analysis was conducted based on

the tax applicable to domestic investment institutions (legal persons) and retail investors (natural

persons). Different rules may apply to cross-border investors, but these were not part of the scope

of this assessment.

Figure 29: Withholding Tax Matrix (%)

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G C G C G C G C G C G C G C G C G C

Natural Person 10% 10% 12% 12% 9% 9% 10% 10% 10% 15% 19%

Legal Person 10% 10% 10% 9% 9% 10% 16% 16% 15%

*Please note that in the above table “G” indicates the tax applied to government bonds, and “C” indicates the tax applied to

corporate bonds.

Whilst there are slight variations across the markets, in general there is alignment on the withholding

tax rates that are applied to both institutional and retail investors (Figure 29). A number of markets

including Bulgaria, North Macedonia, Serbia and the Slovak Republic, have also provided additional

tax incentives for both types of investors in government bonds.

Bulgaria is the only market not to levy any taxes on corporate bonds for either institutional or retail

investors. Croatia and the Slovak Republic offer this dispensation only to institutional investors.


40

7.3. Taxes on Disposal / Sale

This section assesses any taxes which are levied on either the sale or transfer of bond. This will

traditionally include capital gains taxes. It should be noted that the analysis was conducted based on

the tax applicable to domestic investment institutions (legal persons) and retail investors (natural

persons). Different rules may apply to cross-border investors, but these were not part of the scope

of this assessment.

Figure 30: Taxes on Disposal / Sale Matrix (%)

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G C G C G C G C G C G C G C G C G C

Natural Person 10% 10% 10% 10% 10% 10% 12% 12% 9% 9% 7% 7% 10% 10% 15%

Legal Person 10% 10% 10% 10% 10% 10% 18% 18% 9% 9% 10% 10% 16% 16% 15% 21% 21%

*Please note that in the above table “G” indicates the tax applied to government bonds, and “C” indicates the tax applied to

corporate bonds.

Similarly to the section on withholding taxes above, most of the markets are aligned in terms of taxes

levied on disposition / sale at around 10% of the capital gain (Figure 30). Notably, the Slovak Republic

does not levy any taxes on disposition / sale from retail investors in either government or corporate

bonds. Nor does Serbia for government bonds only.


41

8. Ranking and Fee Analysis

8.1. Ranking

The rankings outlined below are based upon the metrics which are outlined in the Bond Market

Analysis framework shown in Appendix 2. Each metric is scored and then the aggregated scores are

weighted and indexed to 100 in order to provide both the cost effectiveness and issuance efficiency

ratings (see Appendix 3 for further details).

As the scores are indexed, it is possible to track the progress of each market over time. The highest

score achievable is 100. The higher the score, the more cost effective or efficient a market is.

Cost Effectiveness

This metric assesses the five key areas in terms of issuance and trading of both government and

corporate bond securities:

- Government Bond Auction Fees

- Corporate Bond Issuance Fees

- Trading Costs (Both Direct and Indirect)

- Settlement and Safekeeping

- Tax

Full details of the scores and weightings can be found in Appendix 3.

Figure 31: Cost Effectiveness Rank

Rank Score

1

Romania 83

2

Bulgaria 81

3

Serbia 74

4

North Macedonia 73

5

Federation of Bosnia and Herzegovina (B&H) 73

6

Republika Srpska (B&H) 70

7

Croatia 64

8

Slovak Republic 55

9

Montenegro 52


42

As Figure 31 shows, Romania as the most cost effective market had strong scores in each of the five

categories. Bulgaria had the highest score in terms of corporate bond issuance fees, making it a

close second. At the other end of the spectrum, Montenegro had low scores in all but the Tax

category, where they have an advantage.

It should be noted that the Slovak Republic, whilst a reference market, scored the second lowest.

This is due to a number of factors. Firstly, the reliance on the Bloomberg system for both bond

auctions and as an ATS makes the market somewhat expensive from a trading perspective. Also

similarly to Montenegro, without caps on certain issuance fees, the cost of issuance in both of these

markets is relatively expensive.

Issuance Efficiency

This metric assesses the two key areas in terms of the timings associated with the issuance of

government and corporate bond securities:

- Government Auction Timeline

- Corporate Bond Issuance Timeline

Full details of the scores and weightings can be found in Appendix 3.

Figure 32: Issuance Efficiency Rank

Rank Score

1

Bulgaria 82

2

Montenegro 75

3

Republika Srpska (B&H) 72

4

Slovak Republic 70

5

Federation of Bosnia and Herzegovina (B&H) 68

6

Croatia 68

7

North Macedonia 63

8

Romania 61

9

Serbia 54

As Figure 32 above shows, Bulgaria is the most efficient market for issuance of all those assessed.

This is largely due to the minimal requirements for the approval of prospectuses or listing for

corporate bond issuance, along with the speed of turnaround from the Bulgarian Stock Exchange if a

bond is to be listed. Equally, the regularity and advanced notice of government bond auctions

provides good notice and information to market participants.


43

Montenegro and the Republika Srpska (B&H), both have short timelines for the issuance of

corporate bonds. However, this may also be due to the low volume of bonds that are (and have

been) issued.

Romania and Serbia both showed the worst score for issuance efficiency, ranking 8th and 9th

respectively. This is largely due to the length of time taken by the regulator to approve prospectuses

and higher than average times for listing.

8.2. Portfolio Cost Analysis

Below is the analysis of the total transactional and holding costs for a portfolio over the course of

one year. The costs outlined below are based on the various characteristics of the model portfolio

and include the following:

- Trading Costs (both direct and indirect)13

- Settlement and Clearing14

- Safekeeping

- Taxation15

The results have been broken down to show the costs for both an institutional investor (legal

person) and a retail investor (natural person). In addition, given the differences in tax levies for

government and corporate bonds, this cost difference has also been outlined.

Figure 33: Portfolio Cost to Natural Person – Chart and Table (€)

13 This includes trading system access for two users for a year, all trading fees (stock exchange and brokerage). It assumes 50

trades per year. 14 This includes both CSD and custody fees. It assumes the clearing and settlement of 50 trades per year as outlined in the

model portfolio. 15 This includes transaction taxes, withholding tax and disposition / sales taxes. Please refer to the model portfolio in section

2.3 for further details on the coupon amount, profit on capital gains etc.

€0

€100,000

€200,000

€300,000

€400,000

€500,000

€600,000

€700,000

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic

Investing in Government Bonds Investing in Corporate Bonds


44

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Investing in Government Bonds (€) 399,000 407,653 154,494 301,825 357,500 545,850 340,800 46,329 107,322

Investing in Corporate Bonds (€) 400,750 408,653 154,869 302,325 358,375 649,600 342,000 346,479 297,672

In terms of retail investors investing in government bonds, Serbia is by far the most cost effective

market, with the total portfolio cost amounting to only €46,329. However, the cost for investing in

corporate bonds is much higher at €346,479, due to the difference in taxation between the two

instrument types. Overall, Bulgaria is the least expensive market in total terms, but this is largely due

to the zero tax levy.

Figure 34: Portfolio Cost to Legal Person (€)

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Investing in Government Bonds (€) 499,000 307,653 154,494 241,825 357,500 575,850 460,800 46,329 317,322

Investing in Corporate Bonds (€) 500,750 408,653 154,869 242,325 358,375 679,600 462,000 346,479 317,672

It is important to note that tax has a significant impact on the overall cost to a portfolio (which is

borne out above).

€0

€100,000

€200,000

€300,000

€400,000

€500,000

€600,000

€700,000

€800,000

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H)


Macedonia


Republic

Investing in Government Bonds Investing in Corporate Bonds


45

9. Federation of Bosnia and Herzegovina

(B&H) Factsheet

9.1. Overview

Cost Effectiveness

This section outlines the cost effectiveness of the market, based on the bond cost effectiveness framework. The score outlines in absolute in

absolute terms how cost effective the market is. The rating outlines is rank relative to the other markets outlined in this study.

Issuance Efficiency

This section outlines the efficiency of the market in terms of speed and awareness of primary issuance, based on the bond efficiency

framework. The score outlines in absolute in absolute terms how cost effective the market is. The rating outlines is rank relative to the other

markets outlined in this study.

Auction Fees 13 out of 15

Rank

5

Corporate Bond Issuance Fees 30 out of 40

Trading Fees 9 out of 15

Settlement & Safekeeping Fees 6 out of 15

Taxation 15 out of 15

Auction Timeline 23 out of 30

Rank

5 Corporate Bond Issuance

Timeline 45 out of 70

Score

73 Out of 100

Score

68 Out of 100


46

9.2. Market Dynamics

Breadth of Instruments16

Instrument Types 2yr 5yr 7yr 10yr 30yr

Treasury Fixed Rate

Treasury Floating Rate

Treasury Inflation Linked

Corporate Bonds (Fixed Rate)

Corporate Bonds (Floating Rate)

Repos with Central Banks

Repos with Market Participants

Government Bond Yield Curve17 Corporate Bond Yield Curve18

Distribution Requirements19

This outlines whether bond is required to be listed on the stock exchange or if it can be done through private placement.

Instrument Types Stock Exchange20 Private Placement

Government Bonds

Corporate Bonds

Liquidity

Value of Outstanding Bonds Listed by Issuance Currency (€mn)21

LCY EUR Other

Government 593

Corporate 61

16 Source: Market Participant Questionnaire, November 2019. 17 No data was able to be gathered in order to construct a yield curve. 18 No data was able to be gathered in order to construct a yield curve. 19 Source: Securities Commission of the Federation of Bosnia and Herzegovina, July 2019 20 It should be noted that responses from the Sarajevo Stock Exchange conflicted with those provided by the Securities

Commission. It was indicated that there was a requirement for bonds to be listed. 21 Source: Sarajevo Stock Exchange, July 2019

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

Yie

ld

Maturity

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

Yie

ld

Maturity


47

Number of Bonds Listed in 201822

Instrument Types Number

Government 4

Corporate 1

Value of Bonds Listed in 2018 by Issuance Currency (€mn)23

LCY EUR Other

Government 372

Corporate 9

Liquidity Indicators of Listed Bonds in 2018 (€mn) 24

Trading Volume (€) LCY EUR Other

Government 13

Corporate 0.2

Turnover Ratio (%)

Government 2.12%

Corporate 0.33%

Market Participants

Number of Entities Authorised to Carry Out the Following Activities25

Banking Brokerage Market-Making

16 6 0

9.3. Government Bond Auction Process

This section outlines the structure process and cost in relation to the primary issuance of government bonds through the auction process.

Structure26

Auction Schedule Timetabled (regular)

Auction Frequency 9027

Auction Type Competitive Tender Award at Bid Price (Dutch-

Style Auction)

22 Source: Sarajevo Stock Exchange, July 2019 23 Source: Sarajevo Stock Exchange, July 2019 24 Source: Sarajevo Stock Exchange, July 2019 25 Source: Securities Commission of the Federation of Bosnia and Herzegovina. November 2019 26 Source: Market Participant Questionnaire, November 2019 27 There is a yearly calendar that on average provides auctions every quarter.


48

Accessibility28

Are there Primary Dealers / Market Makers No

Do Primary Dealers / Market Makers have preferential access? No

Are Auctions Accessible by regulated intermediaries Yes

Are Auctions Accessible by retail investors Yes

Are there auction bid channels for retail investors? Yes - Competitive bid channels

Average Number of Days to of Auction29

Notification Bidding Award Total

Average Number of Days 12 1 1 14

Bid Submission Process

Cost (€)

Electronic Auction Processing System (€ per annum)30

(Sarajevo Stock Exchange Trading System (BTS)) 2,761

Fees paid for bid Submission31 0

9.4. Corporate Bond Issuance

This section outlines the structure process and cost in relation to the primary issuance of corporate bonds.

Requirements to issue a corporate bond32

Prospectus

Approval Credit Rating

Listing on the local

Stock Exchange Other

Required

28 Source: Market Participant Questionnaire, November 2019 29 Source: Market Participant Questionnaire, November 2019 30 Source: Market Participant Questionnaire, November 2019. After investigation of the conflicting numbers given to us by the

market participants, we have conducted our own research and discovered the fees for access to the electronic auctioning

system as being 5400BAM on average between integrated and non-integrated access. 31 Source: Market Participant Questionnaire / Sarajevo Stock Exchange, November 2019 32 Source: Securities Commission of the Federation of Bosnia and Herzegovina, July 2019

0 2 4 6 8 10 12 14 16

Notification

Bidding

Award


49

Other Issuance Factors33

Shelf Registration Allowed Yes

Summary Prospectus of Small Issues Yes

Currency Issuance Restrictions No

Average Number of Days to Issue34

Prospectus35 Credit Rating Listing36 Total

Average Number of Days 21 9 30

Corporate Bond Issuance Fees

Fee Type Minimum

Fee (€) Average Fee37 Cap (€)


Prospectus Approval38 500 5,000 7,500 7,500

Stock Exchange Listing Fees39 500 500 500 500

Stock Exchange Maintenance Fee (p/a)40 1,750 1,750 2,500 2,500

CSD Issuance Fee41 155 742 895 895

Total 2,905 7,992 11,395 11,395

33 Source: Market Participant Questionnaire, November 2019 34 Source: Market Participant Questionnaire, November 2019 35 The Securities Commission has stated that the maximum time meant to provide approval is 30 days. However, in the

Market Participant Questionnaire, one answer stated that on average approval takes 60 days. The number stated includes this

outlier in the calculation of the average. 36 Respondents stated that for government bonds listing takes up to seven days. Corporate Bonds, with all deadlines and

possible corrections to the application, takes up to 30 days. However, normally it takes 8-15 days. 37 Based on the model issuer parameters outlined in Section 2.4. Small Issue would be charged at 0.1% of total issuance

value. Large Issue would be charged at 1.1% of total issuance value. Minimum €500 for securities issued in a public offering.

€300 for securities issuance via private placement. A cap of €7,500 for securities issued in a public offering; €5,000 for

securities issued via private placement. 38 Source: Securities Commission of the Federation of Bosnia and Herzegovina, July 2019 39 Source: Sarajevo Stock Exchange, July 2019 40 Source: Sarajevo Stock Exchange, July 2019 41 Source: Registry of Securities of the Federation of Bosnia and Herzegovina, July 2019

0 2 4 6 8 10 12

Prospectus Approval

Credit Rating

Listing

Days


50

Common Bond Legal Features

Typical Covenants42

Covenant Rare Sometimes Common

Debt / EBITDA

Debt / (EBITDA – Capital Expenditures)

Interest Coverage43

Fixed Charge Coverage44

Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth

Dividend Pay-out Ratio

Limitation on Mergers and Acquisitions

Restrictions on Change of control

Callability45

No callable features are common in the market.

Disclosure requirements46

Annual and financial report, audit report, other sensitive information like increase yearly sales more

than 10 %, change of key person.

9.5. Trading

Trading Systems

Government Corporate Cost per annum (€)

Stock Exchange Trading System47

(Berzanski Sistem Trgovine (BTS)) 2,147

Alternative Trading System (ATS)48 N/A

42 Source: Market Participant Questionnaire, November 2019 43 EBITDA or EBIT / Interest 44 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 45 Source: Market Participant Questionnaire, November 2019 46 Source: Market Participant Questionnaire, November 2019 47 Source: Sarajevo Stock Exchange, July 2019 48 Source: Market Participant Questionnaire, November 2019


51

Average Bid Offer Spreads for On-The-Run Bonds49

Publically Traded 2yr 5yr 7yr 10yr 30yr Average

Government Bonds 21-50 21-50 21-50 51-101 19-40

Corporate Bonds 101-250 101-250

OTC

Government Bonds

Corporate Bonds

It should be noted that bonds cannot be traded OTC.

Fees

Fee Type (per transaction)

Minimum

(bps) Flat Fee (€) % (bps) Cap (€)

Fee per

transaction

(€)

Stock Exchange Trading Fees 50 - 10 1,000

ATS Trading Fees 51

Brokerage fees52 10 35 3,500

Total 10 - 45 - 4,500

9.6. Settlement & Safekeeping

Settlement fees

Fee Type (per transaction) Minimum (€) Avg. Fee (€) Cap (€)

CSD clearing & settlement transaction fees53 830

Custodian Settlement Fees54 10 25

Total Settlement Fees 855

Safekeeping Fees

Fee Type (per annum) Fee (€) % (bps) Cap (€)

CSD Safekeeping fees55 12,500 5 20,452

Custodian Safekeeping Fees56 68,750 28

Total Safekeeping Fees 81,250

49 Source: Market Participant Questionnaire, November 2019 50 Source: Sarajevo Stock Exchange, July 2019 51 Source: Market Participant Questionnaire, November 2019 52 Source: Market Participant Questionnaire, November 2019 53 Source: Registry of Securities of the Federation of Bosnia and Herzegovina, July 2019. Fees are tiered based on type of

institution. Brokers 4.5bps; Custodian Banks 7.5bps; Intra-day transactions, 11.5bps. Average of 8.3bps used in the

calculation. 54 Source: Market Participant Questionnaire, November 2019 55 Source: Registry of Securities of the Federation of Bosnia and Herzegovina, July 2019. 56 Source: Market Participant Questionnaire, November 2019. Responses ranged between 15 bps and 50 bps. An average of

28bps was used in the calculation.


52

9.7. Taxation

Tax Matrix57

Fee Type Government (%) Corporate (%)

Individual Corporate Individual Corporate

Transaction taxes on purchase (e.g. stamp duty)

Withholding taxes on coupons / interest whilst

holding bonds 0% 10% 0% 10%

Taxes on the disposition / sale (e.g. capital gains) 10% 10% 10% 10%

9.8. Fee Analysis

This section provides an overview of the fees in relation to both issuance of corporate bonds and trading of bonds in in the secondary market.

Corporate Bond Issuer Cost

This outlines all the fees required in order to issue a corporate bond. It includes initial issuance costs as well as any ongoing fees. Ongoing fees

are calculated as fees for a single year.

Small Issue58 Large Issue59

Initial Issuance Fees60 6,242 8,895

Ongoing Fees61 1,750 2,500

Total Cost62 7,992 11,395

Portfolio Costs

This outlines all the fees (direct and indirect) and taxes involved in the trading of a portfolio of bonds. All fees calculated for a single year based

on the composition and trading details outlined in the model portfolio.

Natural Person (€ per annum)

Stock Exchange ATS

Government Corporate Government Corporate

Direct Trading Costs63 227,147 227,147

Indirect Trading Costs64 1,250 -

Settlement & Clearing 42,750 42,750

Safekeeping 81,250 81,250

57 Source: Market Participant Questionnaire, November 2019 58 Source: Various sources outlined previously in this section. Based on an issuance amount of €5mn. For further information

please refer to the details in the model portfolio outlined in Section 2.3. 59 Source: Various sources outlined previously in this section. Based on an issuance amount of €50mn. For further

information please refer to the details in the model portfolio outlined in Section 2.3. 60 Includes prospectus approval fees, stock exchange listing fees and CSD issuance fees. 61 Includes stock exchange maintenance fees and any other mandatory annual fees. 62 Assuming first time issuance and listing for 1 year. This is therefore the total annual cost. 63 Includes trading system access for a year, platform and brokerage trading fees. Assumes 50 trades per year based on the

model portfolio. 64 Calculated as average spread in bps for on the run 2, 5 and 10 year bonds. Assumes 50 trades per annum based on the

model portfolio.


53

Tax65 100,000 100,000

Total Trading Cost 452,397 451,147

Portfolio Costs – Legal Person (€ per annum)

Stock Exchange ATS






Tax68 200,000 200,000


65 Calculated as transaction taxes; plus disposition / sales taxes (i.e. capital gains), assumes 50 trades per annum based on the

model portfolio; plus any withholding taxes based on the model portfolio coupon income of €1mn. 66 Includes trading system access for a year, platform and brokerage trading fees. Assumes 50 trades per year based on the


model portfolio. 68 Calculated as transaction taxes; plus disposition / sales taxes (i.e. capital gains), assumes 50 trades per annum based on the

model portfolio; plus any withholding taxes based on the model portfolio coupon income of €1mn.


54

10. Republika Srpska (B&H) Factsheet

10.1. Overview

Cost Effectiveness



Issuance Efficiency





Rank

6






Rank



Score

70 Out of 100

Score

72 Out of 100


55




Treasury Fixed Rate










Instrument Types Stock Exchange Private Placement73

Government Bonds

Corporate Bonds

69 Source: Market Participant Questionnaire, November 2019. 70 Source: Banja Luka Stock Exchange, November 2019 71 Source: Banja Luka Stock Exchange, November 2019. Constructed using Yield To Maturity from a range of unrated bonds

listed on the Banja Luka Stock Exchange 72 Source: Banja Luka Stock Exchange, November 2019 73 It should be noted that there was a difference in response between the responses from Market Participants and the Banja

Luka Stock Exchange, who stated that government bonds could be issued via private placement.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

1 5 7 10 30

Yie

ld

Maturity

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2 5 7 10 30

Yie

ld

Maturity


56

Liquidity


LCY EUR Other

Government 557

Corporate 4



Government 7

Corporate 6


LCY EUR Other

Government 90

Corporate 0.7



Government 155

Corporate 1.8

Turnover Ratio (%)

Government 27.8%

Corporate 43.8%

Market Participants



8 5 0

74 Source: Banja Luka Stock Exchange, July 2019 75 Source: Banja Luka Stock Exchange, July 2019 76 Source: Banja Luka Stock Exchange, July 2019 77 Source: Banja Luka Stock Exchange, and authors own calculations, July 2019 78 Source: The Central Bank of Bosnia and Herzegovina and The Republic of Srpska Securities Commission


57



Structure

Auction Schedule79 Timetabled (regular)


Auction Type80 Competitive Tender Award at Uniform Minimum

Price

Accessibility

Are there Primary Dealers / Market Makers81 No

Do Primary Dealers / Market Makers have preferential access?82 No

Are Auctions Accessible by regulated intermediaries83 Yes

Are Auctions Accessible by retail investors84 Yes

Are there auction bid channels for retail investors?85 Yes - Competitive Bid Channel (via banks only)

Average Number of Days to of Auction


Average Number of Days86 8 1 3 12


Cost (€)


(BSt-T Banjaluka Stock exchange system for trading) 1,840.65


79 Source: Market Participant Questionnaire, November 2019 80 Source: Market Participant Questionnaire, November 2019 81 Source: Market Participant Questionnaire, November 2019 82 Source: Market Participant Questionnaire, November 2019 83 Source: Market Participant Questionnaire, November 2019 84 Source: Market Participant Questionnaire, November 2019 85 Source: Market Participant Questionnaire, November 2019 86 Source: Market Participant Questionnaire, November 2019 87 Source: Banja Luka Stock Exchange and Market Participant Questionnaire. It should be noted that a Stock Exchange

member with special authorities or a Money Market Direct Member do not pay any access fees. For others the cost is 3600

BAM. 88 Source: Market Participant Questionnaire, November 2019

0 2 4 6 8 10 12

Notification

Bidding

Award

Days


58




Prospectus




Required






Prospectus Credit Rating Listing Total



Fee Type Minimum



Prospectus Approval93 511 7,500 75,000 -

Stock Exchange Listing Fees94 150 325 500 500

Stock Exchange Maintenance Fee (p/a)95 250 2,125 5,000 5,000

CSD Issuance Fee96 - 600 600 -

Total 911 10,550 81,100 5,500

89 Source: The Republic of Srpska Securities Commission, July 2019 90 Source: Market Participant Questionnaire, November 2019 91 Source: Market Participant Questionnaire, November 2019 92 Based on the model issuer parameters outlined in Section 2.3 93 Source: The Republic of Srpska Securities Commission, July 2019. Small and large issue prospectus approval fee is 0.15 % of

issuance volume 94 Source: Banja Luka Stock Exchange, July 2019 95 Source: Banja Luka Stock Exchange, July 2019 96 Source: Central Registry of Securities, JSC, Banja Luka, Republic of Srpska

0 2 4 6 8 10 12

Prospectus Approval

Credit Rating

Listing

Days


59


Typical Covenants97


Debt / EBITDA


Interest Coverage98


Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth




Callability100

There are generic provisions for the early redemption of bonds: The issuer may, at any time, redeem

the bonds at any market price or otherwise, provided that, in the case of a public offering, such an

offer is equally available to all bondholders and such an offer is consistent with legal provisions. No

bond holder is required to accept the Issuer's offer or sell any number of bonds in its possession.


Annual audit and financial reports.

10.5. Trading

Trading Systems

Government Corporate Cost per annum [€]

Stock Exchange Trading System

(Exchange Trading System (QuickTrade))102 3,681

Alternative Trading System (ATS)103

97 Source: Market Participant Questionnaire, November 2019 98 EBITDA or EBIT / Interest 99 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 100 Source: Market Participant Questionnaire, November 2019 101 Source: Market Participant Questionnaire, November 2019 102 Source: Banja Luka Stock Exchange. The fee is 7,200 BAM per annum. 103 Source: Market Participant Questionnaire, November 2019


60



Government Bonds 11-20 11-20 11-20 11-20 11-20 16

Corporate Bonds 101-251 176

OTC

Government Bonds 11-20 11-20 11-20 11-20 11-20 16

Corporate Bonds 101-251 176

Fees


Minimum Flat Fee (€) % (bps) Cap (€)

Fee per

transaction

(€)

Stock Exchange Trading Fees 105 - 2 - 200

ATS Trading Fees 106 -

Brokerage fees107 4 20 - 2,000

Total 4 - 22 - 2,200


All numbers below are based on the model portfolio.

Settlement fees

Fee Type (per transaction) Minimum (€) Fee (€) Cap (€)

CSD clearing & settlement transaction fees108 150

Custodian Settlement Fees109 1,500

Total Settlement Fees 1,650

Safekeeping Fees


CSD Safekeeping fees110 153 0.1



104 Source: Market Participant Questionnaire, November 2019 105 Source: Banja Luka Stock Exchange. Fees are 0.02% for bonds and 0.01% for short term T-bills. The fee for bonds has been

used in the calculation. 106 Source: Market Participant Questionnaire, November 2019 107 Source: Market Participant Questionnaire, November 2019 108 Source: Central Registry of Securities, July 2019. The fee is 0.015% (1.5 bps) per transaction. 109 Source: Market Participant Questionnaire, November 2019. Using an average fee of 15 bps. 110 Source: Central Registry of Securities, July 2019. 111 Source: Market Participant Questionnaire, November 2019


61

10.7. Taxation

Tax Matrix112







10.8. Fee Analysis








Total Cost117 10,550 81,100



information please refer to the details in the model portfolio outlined in Section 2.3. 115 Includes prospectus approval fees, stock exchange listing fees and CSD issuance fees. 116 Includes stock exchange maintenance fees and any other mandatory annual fees. 117 Assuming first time issuance and listing for 1 year. This is therefore the total annual cost.


62

Portfolio Costs




Stock Exchange ATS



Indirect Trading Costs119 1,000 12,500



Tax120 200,000 200,000


Legal Person (€ per annum)

Stock Exchange ATS






Tax123 100,000 200,000


118 Includes trading system access for a year, platform and brokerage trading fees. Assumes 50 trades per year based on the


model portfolio. 120 Calculated as transaction taxes; plus disposition / sales taxes (i.e. capital gains), assumes 50 trades per annum based on

the model portfolio; plus any withholding taxes based on the model portfolio coupon income of €1mn. 121 Includes trading system access for a year, platform and brokerage trading fees. Assumes 50 trades per year based on the



the model portfolio; plus any withholding taxes based on the model portfolio coupon income of €1mn.


63

11. Bulgaria Factsheet

11.1. Overview

Cost Effectiveness



Issuance Efficiency





Rank

2






Rank



Score

81 Out of 100

Score

82 Out of 100


64




Treasury Fixed Rate Treasury Floating Rate









Instrument Types Stock Exchange Private Placement

Government Bonds128

Corporate Bonds

124 Source: Market Participant Questionnaire, November 2019. 125 Source: http://www.worldgovernmentbonds.com/country/bulgaria, November 2019 126 Source: Cbonds, November 2019. To construct the curve the following bonds were used. 2yr, 5yr: Bulgarian Energy

Holdings which is a BB (Fitch) rated company (Coupon approx. 3.5%), 10yr: Education and sports complex Lozenets, 3.85%

Coupon. 127 Source: Financial Supervision Commission, July 2019 128 Government bonds have to be listed on the regulated market operated by the Bulgarian Exchange before they can be

traded there. There is no obligation for listing before trading regarding the Multilateral Trading Facility (MTF) operated by the

Exchange.

-0.6%

-0.5%

-0.4%

-0.3%

-0.2%

-0.1%

0.0%

0.1%

0.2%

0.3%

0.4%

2 5 7 10 30

Yie

ld

Maturity

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2 5 7 10 30

Yie

ld

Maturity

http://www.worldgovernmentbonds.com/country/bulgaria


65

Liquidity


LCY EUR Other

Government 2,103 669

Corporate 130 841



Government

Corporate 16


LCY EUR Other

Government 2,365 797

Corporate 131 843



Government 13 12

Corporate 9 17

Turnover Ratio (%)

Government 0.60% 1.81%

Corporate 7.07% 2.05%

Market Participants



26 65

129 Source: Bulgarian Stock Exchange, July 2019 130 Source: Bulgarian Stock Exchange, July 2019 131 Source: Bulgarian Stock Exchange, July 2019 132 Source: Bulgarian Stock Exchange and Authors own calculations, July 2019 133 Source: Financial Supervision Commission and Bulgarian National Bank


66



Structure134

Auction Schedule Ad hoc (irregular)

Auction Frequency -

Auction Type Competitive Tender Award at Bid Price (Dutch-

Style Auction)

Accessibility135

Are there Primary Dealers / Market Makers Yes

Do Primary Dealers / Market Makers have preferential access? No

Are Auctions Accessible by regulated intermediaries Yes

Are Auctions Accessible by retail investors Yes

Are there bid channels for retail investors? Yes - Competitive bid channel





Cost (€)


(Government Securities Auction System (GSAS)) 3,681.29


134 Source: Market Participant Questionnaire, November 2019 135 Source: Market Participant Questionnaire, November 2019 136 Source: Market Participant Questionnaire, November 2019 137 Source: Market Participant Questionnaire, Bulgarian National Bank. 7,200BGN for access to the GSAS access fee plus

monthly maintenance fee 138 Source: Market Participant Questionnaire, November 2019. 2 to 3 EUR fixed fee plus 3 to 5 bps depending on transaction.

A fee of 5bps was used for calculation (as the modal average).

0 2 4 6 8 10 12

Notification

Bidding

Award

Days


67




Prospectus




Required

It should be noted that bonds can only be issued by a Joint Stock Company.


Shelf Registration Allowed No

Summary Prospectus of Small Issues No



Prospectus Credit Rating Listing Total

Average Number of Days 5 5

139 Source: Financial Supervision Commission, July 2019 140 Source: Market Participant Questionnaire, November 2019 141 Source: Market Participant Questionnaire, November 2019

0 1 2 3 4 5 6

Prospectus Approval

Credit Rating

Listing

Days


68


Fee Type Minimum



Prospectus Approval143 - - - -

Stock Exchange Listing Fees144 - 256 256 -

Stock Exchange Maintenance Fee (p/a)145 - 511 511 -

CSD Issuance Fee146 767 818 818 2,556

Total 767 1,585 1,585 2,556


Typical Covenants147


Debt / EBITDA


Interest Coverage148


Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth




Callability150

Call option close to expiry; European style call options; Strike price at par or higher.

142 Based on the model issuer parameters outlined in Section 2.3 143 Source: Financial Supervision Commission, July 2019. Until 1 January 2021, as a measure to support the capital market in

Bulgaria no fee is collected for an approval of a prospectus for public offering of securities. The standard fee for a prospectus

approval is BGN 900 + 0.1% for the difference above BGN 200 000 (issue value) but not more than BGN 5 000. After 1 January

2021 the minimum fee for a prospectus approval will be BGN 900 + 0.1% for the difference above BGN 200 000 (issue value).

After 1 January 2021 the fee cap for a prospectus approval will be BGN 5 000. 144 Source: Bulgarian Stock Exchange, July 2019 145 Source: Bulgarian Stock Exchange, July 2019. Maintenance fee for corporate bonds is EUR 511, for government bonds –

EUR 61. Corporate bonds which interest calculation is based on EURIBOR, have an additional annual maintenance fee of EUR

511 146 Source: Central Depository AD. Minimum of BGN 1,500. Fee for small issue is BGN 1,600. Fee for large issue is BGN 1,600.

There is a cap of 5,000. The cost is also based on the number of bondholders. Assumed that there are 100 bondholders. 147 Source: Market Participant Questionnaire, November 2019 148 EBITDA or EBIT / Interest 149 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 150 Source: Market Participant Questionnaire, November 2019


69


If the issue is traded on a stock exchange they disclose regular financial information using - interim

(quarterly) and annual reports.

11.5. Trading

Trading Systems



(Xetra T7) 1,175.97


(ESROT) 3,681.29



Government Bonds 11-50 101-250 101-250 101-250 101-250 143-183

Corporate Bonds 101-250 101-250 101-250 101-250 101-250 101-250

OTC


Corporate Bonds 101-250 101-250 101-250 101-250 101-250

Fees


Minimum

(€) Flat Fee (€) % (bps) Cap (€)

Fee per

transaction

(€)

Stock Exchange Trading Fees 155 1 1 - 100

ATS Trading Fees 156 2.5 5 - 5 5

Brokerage fees157 5 8 - 750

Total 8.5 5 9 5 855

11.6.

151 Source: Market Participant Questionnaire, November 2019 152 Source: Bulgarian Stock Exchange. The fee is BGN 2,000 for membership, Plus BGN 300 per trader, Plus VAT @ 20% 153 Source: Market Participant Questionnaire, November 2019. ESROT is a government bond trading / settlement platform.

The fee is 7,200BGN which includes both access and a monthly maintenance fee 154 Source: Market Participant Questionnaire, November 2019 155 Source: Bulgarian Stock Exchange, July 2019 156 Source: Market Participant Questionnaire, November 2019 157 Source: Market Participant Questionnaire, November 2019. Answers ranged between 5-100 EUR for Minimum brokerage

fee. €5 was used for the calculation.


70


Settlement fees


CSD clearing & settlement transaction fees158 0.31 10


Total Settlement Fees 10.3

Safekeeping Fees

Fee Type (per annum) Flat fee (€) % (bps) Cap (€)




11.8. Taxation

Tax Matrix162





holding bonds 0% 0% 0%163 0%


11.9. Fee Analysis





158 Source: Central Depository AD, July 2019. The fee is 0.60 BGN. 159 Source: Market Participant Questionnaire, November 2019 160 Source: Central Depository AD, July 2019 161 Source: Market Participant Questionnaire, November 2019 162 Source: Market Participant Questionnaire, November 2019 163 It should be noted that the tax rate is only 0% when the bond is issued by a company listed on the local stock exchange.


71



Ongoing Fees167 511 511

Total Cost168 1,585 1,585

Portfolio Costs




Stock Exchange ATS


Direct Trading Costs169 43,676 43,676 41,431

Indirect Trading Costs170 12,500 12,500 -

Settlement & Clearing 515 515 515

Safekeeping 12,547 12,547 12,547

Tax171 100,000 100,000 100,000

Total Trading Cost 169,238 169,238 154,494

Portfolio Costs – Legal Person (€ per annum)

Stock Exchange ATS



Indirect Trading Costs173 12,500 12,500 -

Settlement & Clearing 515 515 515

Safekeeping 12,547 12,547 12,547

Tax174 100,000 100,000 100,000

Total Trading Cost 169,238 169,238 154,494

164 Source: Various sources outlined previously in this section. Based on an issuance amount of €5mn. For further information










72

12. Croatia Factsheet

12.1. Overview

Cost Effectiveness



Issuance Efficiency





Rank

7






Rank



Score

64 Out of 100

Score

68 Out of 100


73




Treasury Fixed Rate










Instrument Types Stock Exchange Private Placement179

Government Bonds

Corporate Bonds

Liquidity


LCY EUR Other

Government 8,929 5,535

Corporate 476 69

175 Source: Market Participant Questionnaire, November 2019. 176 Source: http://www.worldgovernmentbonds.com/country/croatia, November 2019 177 Source: Cbonds, November 2019 178 Source: Zagreb Stock Exchange, HANFA, July 2019 179 Only according to Prospectus Regulation: Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14

June 2017 requires the prospectus to be published when securities are offered to the public or admitted to trading on a

regulated market, and repealing Directive 2003/71/EC 180 Source: Zagreb Stock Exchange, July 2019

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

2 5 7 10 30

Yie

ld

Maturity

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2 5 7 10 30

Yie

ld

Maturity

http://www.worldgovernmentbonds.com/country/croatia


74



Government 1

Corporate 1


LCY EUR Other


Corporate 438 68

Liquidity Indicators of Listed Bonds in 2018 (€mn)

Trading Volume (€)183 LCY EUR Other

Government 73 21

Corporate 3 0.63

Turnover Ratio (%)184



Market Participants


Banking Brokerage186 Market-Making

20 27 2

181 Source: Zagreb Stock Exchange, July 2019 182 Source: Zagreb Stock Exchange, July 2019 183 Source: Zagreb Stock Exchange, July 2019 184 Source: Zagreb Stock Exchange, July 2019 185 Source: HANFA, July 2019 186 Including banks and companies managing open-ended investment funds with public offering which have received

authorisation by HANFA to provide investment service of portfolio management and/or investment advice


75



Structure

Auction Schedule187 Ad hoc (irregular)

Auction Frequency188 19

Auction Type189 Competitive Tender Award at Uniform Minimum

Price

Accessibility




Are Auctions Accessible by retail investors193 No

Are there auction bid channels for retail investors?194 No





Cost (€)


(Bloomberg Auction System) 43,132


187 Source: Market Participant Questionnaire, November 2019. The Ministry of Finance announces the auction through the

Bloomberg Auction System no later than two business days before the auction of treasury bills. 188 Source: Market Participant Questionnaire and Republic of Croatia Ministry of Finance, November 2019. The number

reflects the average length of time between government bond auctions held in 2018. 189 Source: Market Participant Questionnaire, November 2019 190 Source: Market Participant Questionnaire, November 2019 191 Source: Market Participant Questionnaire, November 2019 192 Source: Market Participant Questionnaire, November 2019 193 Source: Market Participant Questionnaire, November 2019 194 Source: Market Participant Questionnaire, November 2019 195 Source: Market Participant Questionnaire, November 2019 196 Source: Market Participant Questionnaire, November 2019. Cost assumes the standard cost for a Bloomberg terminal of

$24,000 per user x2 terminals. 197 Source: Market Participant Questionnaire, November 2019

0 1 2 3 4 5

Notification

Bidding

Award

Days


76




Prospectus

Approval199 Credit Rating200



Required


Shelf Registration Allowed202 Yes




Prospectus204 Credit Rating Listing Total


198 Source: Market Participant Questionnaire, HANFA, November 2019 199 According to Article 1 Paragraph 4 of Regulation (EU) 2017/1129 of the European parliament and of the Council of 14 June

2017 on the prospectus to be publish when securities are offered to the public or admitted to trading on a regulated market,

and repealing Directive 2003/71/EC the obligation to publish a prospectus does not apply to certain types of offers securities

to the public (e.g. an offer of securities addressed solely to qualified investors, fewer than 150 natural or legal persons per

Member State etc.) 200 Although there is no requirement for a credit rating, if there is credit rating it should be specified and described. 201 Source: Market Participant Questionnaire, HANFA, November 2019 202 According to Article 9 of Regulation (EU) 2017/1129 of the European parliament and of the Council of 14 June 2017 on the

prospectus to be publish when securities are offered to the public or admitted to trading on a regulated market, and

repealing Directive 2003/71/EC an issuer with securities admitted to an EU regulated market or an MTF will be able to draw up

and file with competent authority of its home Member State a “universal registration document” (URD). The URD is intended

to function as the registration document component of all the issuer's prospectuses, in a similar manner to shelf registration

in the US. 203 Source: Market Participant Questionnaire, November 2019 204 It should be noted that HANFA stated that approval of a prospectus should take between 10/20 working days. However,

this conflicts with the information provided by market participants.

0 10 20 30 40 50 60 70

Prospectus Approval

Credit Rating

Listing

Days


77


Fee Type Minimum



Prospectus Approval206 - 542 542 -

Stock Exchange Listing Fees207 2,699 2,699 6,749 6,749

Stock Exchange Maintenance Fee (p/a)208 2,130 2,130 2,130 2,130


Total 4,829 5,911 9,961 8,879




Debt / EBITDA




Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth




Callability213

No standard callable features were identified.


No standard disclosure requirements were identified.

205 Based on the model issuer parameters outlined in Section 2.4 206 Source: HANFA. Small and Large Issue are both charged at 4,000HRK for prospectus approval. 207 Source: Zagreb Stock Exchange 208 Source: Zagreb Stock Exchange 209 Source: Central Depository & Clearing Company 210 Source: Market Participant Questionnaire, November 2019 211 EBITDA or EBIT / Interest 212 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 213 Source: Market Participant Questionnaire, November 2019 214 Source: Market Participant Questionnaire, November 2019


78

12.5. Trading

Trading Systems



(Xetra) 520





Corporate Bonds 51-100 51-100 51-100 51-100 51-100

OTC


Corporate Bonds 51-100 51-100 51-100 51-100 51-100

Fees


Minimum

(€) Flat Fee (€) % (bps) Cap (€)

Fee per

transaction

(€)

Stock Exchange Trading Fees 218 2 3 300

ATS Trading Fees 219

Brokerage fees220 50 10 1,000

Total 1,300



Settlement fees

Fee Type (per transaction) Minimum (€) Flat fee (€) Cap (€)

CSD clearing & settlement transaction fees221 14 14



215 Source: Zagreb Stock Exchange, July 2019 216 Source: Market Participant Questionnaire, November 2019 217 Source: Market Participant Questionnaire, November 2019 218 Source: Zagreb Stock Exchange, July 2019 219 Source: Market Participant Questionnaire, November 2019 220 Source: Market Participant Questionnaire, November 2019 221 Source: Central Depository & Clearing Company, July 2019 222 Source: Market Participant Questionnaire, November 2019


79

Safekeeping Fees


CSD Safekeeping fees223 2,500 1



12.7. Taxation

Tax Matrix225







12.8. Fee Analysis








Total Cost230 5,911 9,961

223 Source: Central Depository & Clearing Company, July 2019. Up to 54mn EUR the fee is 1bps, from 54mn EUR up to 540mn

EUR the fee is 2bps. Over 540mn EUR the fee is 0.1bps. Minimum monthly fee is 100 EUR and maximum is 2,700 EUR. 224 Source: Market Participant Questionnaire, November 2019. It should also be noted that market participant(s) stated that

the custodian safekeeping fees were up to 30bps for retail providers. 225 Source: Market Participant Questionnaire, November 2019 226 Source: Various sources outlined previously in this section. Based on an issuance amount of €5mn. For further information




80

Portfolio Costs




Stock Exchange ATS


Direct Trading Costs231 65,520 65,520 50,000 50,000

Indirect Trading Costs232 5,000 5,000 - 500.00

Settlement & Clearing 1,825 1,825 1,825.00 1,825.00

Safekeeping 10,000 10,000 10,000.00 10,000.00

Tax233 240,000 240,000 240,000 240,000

Total Portfolio Cost 322,345 322,345 301,825.00 302,325.00

Portfolio Costs (€ per annum) – Legal Person

Stock Exchange ATS



Indirect Trading Costs235 5,000 5,000 - 500.00

Settlement & Clearing 1,825 1,825 1,825.00 1,825.00

Safekeeping 10,000 10,000 10,000.00 10,000.00

Tax236 180,000 180,000 180,000 180,000

Total Portfolio Cost 262,345 262,345 241,825.00 242,325.00









81

13. Montenegro Factsheet

13.1. Overview

Cost Effectiveness



Issuance Efficiency





Rank

9






Rank



Score

52 Out of 100

Score

75 Out of 100


82




Treasury Fixed Rate











Government Bonds

Corporate Bonds

Liquidity


LCY EUR Other

Government 309

Corporate 14

237 Source: Market Participant Questionnaire, November 2019. 238 Source: Cbonds, November 2019 239 Source: Cbonds, November 2019 240 Source: Komisija za tržište kapitala/Montenegro Stock Exchange, July 2019 241 Source: Montenegro Stock Exchange, July 2019

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2 5 7 10 30

Yie

ld

Maturity

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2 5 7 10 30

Yie

ld

Maturity


83



Government 1

Corporate


LCY EUR Other

Government 145

Corporate 14



Government 3

Corporate 0.55

Turnover Ratio (%)

Government 0.87%

Corporate 3.94%

Market Participants



13 2 0



Structure

Auction Schedule246 Ad hoc (irregular)

Auction Frequency -

Auction Type247 Competitive Tender Award at Bid Price (Dutch-

Style Auction)

242 Source: Montenegro Stock Exchange, July 2019 243 Source: Montenegro Stock Exchange, July 2019 244 Source: Montenegro Stock Exchange and authors own calculations, , July 2019 245 Source: Central Bank of Montenegro and the Securities Commission, November 2019 246 Source: Market Participant Questionnaire, November 2019 247 Source: Market Participant Questionnaire, November 2019 and Ministry of Finance. Legislation allows both methods of

uniform minimum price and bid price (Dutch style), in 2019 and 2018, the majority of auctions have been Dutch style.


84

Accessibility

Are there Primary Dealers / Market Makers248 Yes




Are there auction bid channels for retail investors?252 Both – Competitive and non-competitive





Cost (€)


(Montenegro Stock Exchange) 3,000





Prospectus




Required

248 Source: Market Participant Questionnaire, November 2019 249 Source: Market Participant Questionnaire, November 2019 250 Source: Market Participant Questionnaire, November 2019 251 Source: Market Participant Questionnaire, November 2019 252 Source: Market Participant Questionnaire, November 2019 253 Source: Market Participant Questionnaire, November 2019 254 Source: Market Participant Questionnaire, November 2019 255 Source: Market Participant Questionnaire, November 2019. The fee is 5 bps of bid size. 256 Source: Komisija za tržište kapitala, July 2019

0 2 4 6 8 10 12 14

Notification

Bidding

Award

Days


85




Currency Issuance Restrictions Yes. It is only possible to issue and trade bonds in local

currency and EUR.





Fee Type Minimum



Prospectus Approval261 300 15,000 150,000

Stock Exchange Listing Fees262 500 100

Stock Exchange Maintenance Fee (p/a)263 8,000 10,500

CSD Issuance Fee264 620 1,215 1,665

Total 920 24,715 162,265

257 Source: Market Participant Questionnaire, November 2019 258 Source: Market Participant Questionnaire, November 2019 259 Komisija za tržište kapitala stated the time to authorise a prospectus as 10 days, however, market participants indicated

that approval could take up to 14 days. The regulator states that when an issuer who has not previously offered securities to

the public issues securities or applies for admission to trading on a regulated market for the first time, the CMA shall decide

on the application within 20 working days following the date of submission of the application 260 Based on the model issuer parameters outlined in Section 2.4 261 Source: Komisija za tržište kapitala, July 2019, The fee is 0.30% of the total issuance volume 262 Source: Montenegro Stock Exchange, July 2019 263 Source: Montenegro Stock Exchange, July 2019 264 Source: Central Securities Depository and Clearing Company of Montenegro, July 2019. Registry Setup is 0.02% total

nominal value, but not less than 600. Initial account opening for shareholders is €1.65 per account at issue. On an annual

basis t0.1 BPS for a part of the issue up to 10 million €, 0.05 BPS for a part of the issue from 10 to 200 million €, and 0.01 BPS

for a part of the issue over 200 million € - charged to the Issuer, on a monthly basis, minimum 20 €. Should be noted that the

CSD originally stated that the fee was 10bps

0 5 10 15 20 25

Prospectus Approval

Credit Rating

Listing

Days


86




Debt / EBITDA




Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth




Callability268




13.5. Trading

Trading Systems



(BTS trading system version 2.6) 8,000


265 Source: Market Participant Questionnaire, November 2019 266 EBITDA or EBIT / Interest 267 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 268 Source: Market Participant Questionnaire, November 2019 269 Source: Market Participant Questionnaire, November 2019 270 Source: Montenegro Stock Exchange, July 2019 271 Source: Market Participant Questionnaire, November 2019


87




Corporate Bonds 101-250 101-250 101-250 101-250 101-250 101-250

OTC

Government Bonds

Corporate Bonds

Bonds cannot be traded OTC.

Fees



Fee per

transaction

(€)

Stock Exchange Trading Fees 273 - 9 - 900



Total 10 - 27 - 2,650



Settlement fees


CSD clearing & settlement transaction fees276 0.90 300

Custodian Settlement Fees277 10 1,000

Total Settlement Fees

Safekeeping Fees


CSD Safekeeping fees278



272 Source: Market Participant Questionnaire, November 2019 273 Source: Montenegro Stock Exchange, July 2019 274 Source: Market Participant Questionnaire, November 2019 275 Source: Market Participant Questionnaire, November 2019. Brokerage fees ranged between 10 and 25 bps 276 Source: Central Securities Depository and Clearing Company of Montenegro, July 2019. Fees are 3bps of transaction

settlement value (market price plus accrued interest) - per each side (seller & buyer), with a minimum €0.90. 277 Source: Market Participant Questionnaire, November 2019 278 Source: Central Securities Depository and Clearing Company of Montenegro. 279 Source: Market Participant Questionnaire, November 2019


88

13.7. Taxation

Tax Matrix280







13.8. Fee Analysis







Ongoing Fees284 8,000 10,500

Total Cost285 24,715 162,265

Portfolio Costs







89


Stock Exchange ATS






Tax288 180,000 180,000

Total Portfolio Cost 413,000 416,750

Legal Person - (€ per annum)

Stock Exchange ATS






Tax291 180,000 180,000

Total Portfolio Cost 413,000 416,750









90

14. North Macedonia Factsheet

14.1. Overview

Cost Effectiveness



Issuance Efficiency





Rank

4






Rank



Score

74 Out of 100

Score

63 Out of 100


91














Government Bonds296

Corporate Bonds

Liquidity


LCY EUR Other

Government 1,056 49

Corporate 5

292 Source: Market Participant Questionnaire, November 2019. 293 As most government bonds are traded OTC we have not been able to collect reliable data on yields. 294 As most corporate bonds are traded OTC we have not been able to collect reliable data on yields. 295 Source: Securities and Exchange Commission of the Republic of North Macedonia / Macedonian Stock Exchange, 296 According to the agreement between the Ministry of Finance and the Macedonian Stock Exchange, starting from 1

September 2019, all bonds issued by the Ministry of Finance will be listed on the Official Market. 297 Source: Macedonian Stock Exchange

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

Yie

ld

Maturity

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

Yie

ld

Maturity


92



Government 2

Corporate


LCY EUR Other

Government 55

Corporate

Liquidity Indicators of Listed Bonds in 2018 (€)300


Government 8.5

Corporate 0.1

Turnover Ratio (%)

Government 17.45%

Corporate 2.00%

Market Participants



14 5 0



Structure



Auction Type303 Ad Hoc (Non-Competitive Tender)

298 Source: Macedonian Stock Exchange, July 2019 299 Source: Macedonian Stock Exchange, July 2019 300 Source: Macedonian Stock Exchange, July 2019 301 Source: Securities and Exchange Commission of the Republic of North Macedonia, July 2019 302 Source: Market Participant Questionnaire, November 2019 303 Source: Market Participant Questionnaire, and he National Bank of the Republic of North Macedonia, November 2019.

Non-competitive tender and Dutch tender methods are allowed under current legislation, however, all auctions since 2009

have been volume tender, i.e. non-competitive


93

Accessibility





Are there auction bid channels for retail investors?308 Yes - Non-competitive bid channels

Average Number of Days to Auction




Cost (€)


(Electronic system for market operations of National bank

of North Macedonia)

0





Prospectus




Required

304 Source: Market Participant Questionnaire, November 2019 305 Source: Market Participant Questionnaire, November 2019 306 Source: Market Participant Questionnaire, November 2019 and verified with the Rulebook on the Manner and Procedure

for Issuance and Payment of Government Securities 307 Source: Market Participant Questionnaire, November 2019 308 Source: Market Participant Questionnaire, November 2019 and verified with the Rulebook on the Manner and Procedure

for Issuance and Payment of Government Securities 309 Source: Market Participant Questionnaire, November 2019 310 Source: Market Participant Questionnaire, November 2019 311 Source: Market Participant Questionnaire, November 2019 312 Source: Securities and Exchange Commission of the Republic of North Macedonia, Market Participant Questionnaire,

November 2019

0 1 2 3 4 5 6 7 8 9

Notification

Bidding

Award

Days


94





Bonds can be issued through either public offer or private placement. A Prospectus is required

when bonds are issued through a public offer. According to the Law on Securities there is a value

limit for issuance of bonds. Namely the nominal value of single issuance of bonds cannot exceed the

total amount of the issuer’s basic capital. In a case where the issuance of bonds is guaranteed by a

bank, the largest value of an issue shall not exceed the amount of basic capital and the amount of

issued bank guarantee.


Prospectus Credit Rating Listing315 Total



Fee Type Minimum



Prospectus Approval317 488 7,500 75,000 -

Stock Exchange Listing Fees318 163 500 1,626 1,626

Stock Exchange Maintenance Fee (p/a)319 - 650 650 -

CSD Issuance Fee320 715 820 1,040 1,040

Total 1,366 9,470 78,316 2,666

313 Source: Market Participant Questionnaire, November 2019 314 Source: Market Participant Questionnaire, November 2019 315 The process of listing of government bonds is almost fully automated and usually takes up to a week, depending on a type

of bond and the potential need for a MSE Board decision. For corporate bonds, it depends on the quality of the prospectus

and additional documents that are required to be submitted, but usually between 14 and 30 days. Market participants

suggested that the average was 22 days. 316 Based on the model issuer parameters outlined in Section 2.4 317 Source: Securities and Exchange Commission of the Republic of North Macedonia. The minimum fee is MKD 30,000. 318 Source: Macedonian Stock Exchange, July 2019 319 Source: Macedonian Stock Exchange, July 2019 320 Source: Central Securities Depository AD Skopje. The fee is 32,000 MKD for initial registration. Annual Fees: For securities

that are not listed it is 0,006% of the nominal value of the issue, with a minimum fee of 12,000 MKD and a maximum fee of

32,000 MKD. For securities that are listed it is 0,008% of the market value of the issue, with a minimum fee of 16,000 MKD,

and a maximum fee of 78,000 MKD.

0 10 20 30 40 50 60 70 80 90

Prospectus Approval

Credit Rating

Listing

Days


95




Debt / EBITDA




Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth




Callability324



Basic and historical data, organisational structure, employees, main shareholders, financial data,

management are required.

14.5. Trading

Trading Systems



(BEST) 2,400


321 Source: Market Participant Questionnaire, November 2019 322 EBITDA or EBIT / Interest 323 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 324 Source: Market Participant Questionnaire, November 2019 325 Source: Market Participant Questionnaire, November 2019 326 Source: Macedonian Stock Exchange. The fees are €5,000 for initial setup and €200 per month for members. There is no a

cost for the trading system for issuers. 327 Source: Market Participant Questionnaire, November 2019


96



Government Bonds

Corporate Bonds

OTC

Government Bonds 21-50 11-20 16-35

Corporate Bonds

Fees


Minimum

(bps) Flat Fee (€) % (bps) Cap (€)

Fee per

transaction

(€)

Stock Exchange Trading Fees 329 - 2.5 - 250



Total - - 7,750


Settlement fees


CSD clearing & settlement transaction fees332 1,000


Total Settlement Fees 1,016

Safekeeping Fees


CSD Safekeeping fees334 50



328 Source: Market Participant Questionnaire, November 2019 329 Source: Macedonian Stock Exchange, July 2019. Fees are 0,25% per side in transaction for government denationalization

bonds, 0,025% per side in transaction for all other government and corporate bonds 330 Source: Market Participant Questionnaire, November 2019 331 Source: Market Participant Questionnaire, November 2019. Response ranged between 12 and 100bps. Respondent(s)

stated that for larger trades (i.e. those over €1,500), fees would generally increase to between 50 and 100bps. Based on the

responses, an average of 75bps was used based on the dynamics of the model portfolio. 332 Source: Macedonian Stock Exchange, July 2019. Settlement fees are 0.1% of the transaction value 333 Source: Market Participant Questionnaire, November 2019 334 Source: Central Securities Depository AD Skopje, July 2019. Safekeeping fees are not based on the value of holdings to the

account holder, but rather are charged by the number of accounts which hold a bond and are charged to the issuer. For

comparison we have shown the value that is charged on an annual basis to an issuer here, assuming there are 100 account

holders. 335 Source: Market Participant Questionnaire, November 2019


97

14.7. Taxation

Tax Matrix336







14.8. Fee Analysis








Total Cost341 9,470 78,316





98

Portfolio Costs




Stock Exchange ATS






Tax344 70,000 170,000



Stock Exchange ATS






Tax347 100,000 200,000










99

15. Romania Factsheet

15.1. Overview

Cost Effectiveness



Issuance Efficiency





Rank

1






Rank



Score

83 Out of 100

Score

61 Out of 100


100




Treasury Fixed Rate











Government Bonds

Corporate Bonds

Liquidity


LCY EUR Other

Government 10,995

Corporate 2,493 2,038

348 Source: Market Participant Questionnaire, November 2019. 349 Source: http://www.worldgovernmentbonds.com/country/romania/, November 2019 350 Source: Cbonds, November 2019 351 Source: Autoritatea de Supraveghere Financiară / Bucharest Stock Exchange, July 2019 352 Source: Bucharest Stock Exchange, July 2019

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2 5 7 10 30

Yie

ld

Maturity

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2 5 7 10 30

Yie

ld

Maturity


101



Government 4

Corporate 4


LCY EUR Other

Government 2,569

Corporate 300 915

Liquidity Indicators of Listed Bonds in 2018 (€)355


Government 130

Corporate 2,024 4.5

Turnover Ratio (%)

Government 1.18%


Market Participants



24 20 1



Structure


Auction Frequency 7

Auction Type358 Competitive Tender Award at Bid Price (Dutch-

Style Auction)

353 Source: Bucharest Stock Exchange, July 2019 354 Source: Bucharest Stock Exchange, July 2019 355 Source: Bucharest Stock Exchange, July 2019 356 Source: National Bank of Romania, November 2019 357 Source: Market Participant Questionnaire, November 2019 358 Source: Market Participant Questionnaire, November 2019


102

Accessibility


Do Primary Dealers / Market Makers have preferential access?360 Yes


Are Auctions Accessible by retail investors362 No (Not directly but through banks.)

Are there auction bid channels for retail investors?363 Yes - Competitive bid auction





Cost (€)


(SaFIR) 0

Fees paid for bid Submission366 2.22




Prospectus




Required

359 Source: Market Participant Questionnaire, November 2019 360 Source: Market Participant Questionnaire, November 2019 361 Source: Market Participant Questionnaire, November 2019 362 Source: Market Participant Questionnaire, November 2019 363 Source: Market Participant Questionnaire, November 2019 364 Source: Market Participant Questionnaire, November 2019 365 Source: Market Participant Questionnaire, November 2019 366 Source: National Bank of Romania, November 2019. The fee is 10.50 RON. 367 Source: Autoritatea de Supraveghere Financiară, Market Participant Questionnaire, November 2019

0 2 4 6 8 10 12

Notification

Bidding

Award

Days


103



Summary Prospectus of Small Issues369 Yes

Currency Issuance Restrictions370 Yes


Prospectus372 Listing373 Other Total



Fee Type Minimum



Prospectus Approval375 - 2,500 25,000 105,848

Stock Exchange Listing Fees376 320 549 549 -

Stock Exchange Maintenance Fee (p/a)377 300 549 549 -

CSD Issuance Fee378 178 178 178 30,444

Total 798 3,776 26,276 136,292

368 Source: Market Participant Questionnaire, November 2019 369 Source: Autoritatea de Supraveghere Financiară, July 2019. Starting with 21 July 2019, Regulation (UE) 2017/1129 will be

applicable. According to Article 15 of this UE Regulation, an EU Growth prospectus is allowed in certain cases. There are no

rules allowing summary prospectuses merely for small issues, as stated in the model portfolio. 370 Bonds can only be issued in RON and EUR. 371 Source: Market Participant Questionnaire, November 2019 372 It should be noted that the Autoritatea de Supraveghere Financiară stated that prospectuses should be approved within

10 days, but this conflicted with responses from market participants. 373 Source: Bucharest Stock Exchange, July 2019. The number of the days is calculated from the moment of receiving the

request for the agreement in principle to be traded on BSE’s bonds market. The listing has 2 stages: agreement in principle

and admission. The domestic authority is issuing the registration certificate and after this moment BSE will admit the bond to

trading. 374 Based on the model issuer parameters outlined in Section 2.4 375 Source: Autoritatea de Supraveghere Financiară. For listed securities, the fee is 0.05% of the issue value, but no more than

500,000 RON. Plus 5,000 RON for the prospectus approval. 376 Source: Bucharest Stock Exchange, July 2019 377 Source: Bucharest Stock Exchange, July 2019 378 Source: Depozitarul Central, July 2019. The cost levied by CSD to a company for issuing a corporate bond is not related to

the issuance size but to the number of holders and/or the denomination currency. These are annual and include safekeeping.

If the denomination currency is EUR, then the cost is EUR 700/year irrespective of the number of holders. The minimum Fee is

840 RON for if the issue is for up to 500 bondholders and if denomination currency is RON. If the denomination currency is

EUR then there is a flat fee of €700. Likewise, max is 144,000 RON or €700. For this calculation a total of 100 bondholders has

been assumed.

0 10 20 30 40 50 60 70 80

Prospectus Approval

Listing

Other

Days


104




Debt / EBITDA




Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth




Callability382



It is common for conflict of interest provisions to be required for disclosure to bondholders.

15.5. Trading

Trading Systems



(Arena Automated Exchange Platform) 320


(BSE ALTERNATIVE TRADING SYSTEM

(AeRO)) 423386




Corporate Bonds 21-50 21-50 21-50 21-50 21-50

379 Source: Market Participant Questionnaire, November 2019 380 EBITDA or EBIT / Interest 381 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 382 Source: Market Participant Questionnaire, November 2019 383 Source: Market Participant Questionnaire, November 2019 384 Source: Bucharest Stock Exchange, July 2019 385 Source: Market Participant Questionnaire, November 2019 386 The fee is 2,000 RON/year 387 Source: Market Participant Questionnaire, November 2019


105

OTC


Corporate Bonds 21-50 21-50 21-50 21-50 21-50

Fees



Fee per

transaction

(€)

Stock Exchange Trading Fees 388 - 0.7 - 70

ATS Trading Fees 389 - 1.0 - 100

Brokerage fees390 - 25.0 - 2,500

Total - - 26.70 - 2,670


Settlement fees



Custodian Settlement Fees392 21


Safekeeping Fees


CSD Safekeeping fees393 178 0.07 30,444



388 Source: Bucharest Stock Exchange, July 2019. The fee is 0.01% for corporate bonds, 0.004% for government bonds. A

simple average of the two fees was used in this calculation. 389 Source: Market Participant Questionnaire, November 2019 390 Source: Market Participant Questionnaire, November 2019 391 Source: Depozitarul Central, July 2019. Depends on various circumstances. Used for calculation: Trades concluded in RON

on trading venues - settlement on a net basis of 0.2bps with a maximum of 150 RON. Trades concluded in RON on trading

venues - settlement on a gross basis are 2.5bps, with a maximum of 125 RON. Trades concluded in RON outside the trading

venues - 9.5bps. Trades concluded in EUR on trading venues and settled on Target-2-Securities (T2S) Platform - €1 per trade.

Trades concluded in EUR outside the trading venues and settled on T2S platform - €15 per trade. Trades concluded in EUR

outside the trading venues and settled on T2S platform – turnaround trades – €10 per trade. Fees used in this calculation are

for Trades concluded in RON on a net basis. 392 Source: Market Participant Questionnaire, November 2019 393 Source: Depozitarul Central, July 2019. Maintenance fees calculated on a per account basis. 100 bondholders were

assumed and for a bond issued in RON, which is an annual fee of RON 840. If the bond is issued in EUR there is a flat fee of

€700. The cap of fees is 144,000 RON for issues with more than 500,001 bondholders. 394 Source: Market Participant Questionnaire, November 2019


106

15.7. Taxation

Tax Matrix395







15.8. Fee Analysis








Total Cost400 4,833 27,333





107

Portfolio Costs



Natural Person - (€ per annum)

Stock Exchange ATS



Indirect Trading Costs402 500 2,500 1,250

Settlement & Clearing 2,650 2,650 2,650

Safekeeping 7,678 7,678 7,678

Tax403 200,000 200,000 200,000

Total Portfolio Cost 339,648 341,648 342,000


Stock Exchange ATS



Indirect Trading Costs405 500 2,500 1,250


Safekeeping 7,678 7,678 7,678

Tax406 320,000 320,000 320,000










108

16. Serbia Factsheet

16.1. Overview

Cost Effectiveness



Issuance Efficiency





Rank

3






Rank



Score

74 Out of 100

Score

54 Out of 100


109




Treasury Fixed Rate











Government Bonds

Corporate Bonds

Liquidity


LCY EUR Other


Corporate

407 Source: Market Participant Questionnaire, November 2019. 408 Source: http://www.worldgovernmentbonds.com/country/serbia/, November 2019 409 No corporate bonds are listed on the Belgrade Stock Exchange in order to construct a yield curve. 410 Source: Securities Commission of the Republic of Serbia / Belgrade Stock Exchange, July 2019. The Serbian Law on the

Capital Market (Capital Market Law) in Article 12 contains private placement rules as it prescribes exemptions from the

obligation to publish a prospectus for both equity and debt securities. Article 12 of the Capital Market Law is applicable to

both government and corporate bonds. 411 Source: Belgrade Stock Exchange, July 2019

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2 5 7 10 30

Yie

ld

Maturity

-1.0%

-0.5%

0.0%

0.5%

1.0%

2 5 7 10 30

Yie

ld

Maturity

http://www.worldgovernmentbonds.com/country/serbia/


110



Government 11

Corporate 0


LCY EUR Other


Corporate



Government 335 129

Corporate

Turnover Ratio (%)


Corporate

Market Participants



26 2 2



Structure



Auction Type417 Competitive Tender Award at Uniform Minimum Price

412 Source: Belgrade Stock Exchange, July 2019 413 Source: Belgrade Stock Exchange, July 2019 414 Source: Belgrade Stock Exchange and author’s calculation, July 2019. 415 Source: National Bank of Serbia and the Securities Commission of the Republic of Serbia 416 Source: Market Participant Questionnaire, November 2019 417 Source: Market Participant Questionnaire, November 2019


111

Accessibility





Are there auction bid channels for retail investors?422 Yes - Both competitive / non-competitive





Cost (€)


(PDA Auction platform) 0





Prospectus



Stock Exchange Other427

Required

418 Source: Market Participant Questionnaire, November 2019 419 Source: Market Participant Questionnaire, November 2019 420 Source: Market Participant Questionnaire, November 2019 421 Source: Market Participant Questionnaire, November 2019 422 Source: Market Participant Questionnaire, November 2019 423 Source: Market Participant Questionnaire, November 2019 424 Source: Market Participant Questionnaire, November 2019 425 Source: Market Participant Questionnaire, November 2019 426 Source: Securities Commission of the Republic of Serbia, Market Participant Questionnaire, November 2019 427 Bond issues are required to be registered with the Central Depositary Registry

0 1 2 3 4 5 6

Notification

Bidding

Award

Days


112




Currency Issuance Restrictions429

Yes. Prior to the issuance of financial instruments

denominated in a foreign currency, the issuer must

obtain the approval from the National Bank of Serbia.


Prospectus431 Listing Other Total


428 Source: Market Participant Questionnaire, November 2019 429 Article 9. Law on Capital markets 430 Source: Market Participant Questionnaire, November 2019 431 Securities Commission of the Republic of Serbia stated that prospectuses should be reviewed within 20 days. The average

number of days required for prospectus approval may significantly vary given that the decision on prospectus approval

depends on the delivery of a complete application for approval of the publication of the prospectus. Pursuant to Article 27 of

the Capital Market Law the Securities Commission shall issue a decision on approval of the publication of a prospectus within

10 working days following the receipt of a complete application for approval of the publication of the prospectus. The

prescribed time limit may extended to 20 working days if the public offering involves securities issued by an issuer which does

not have any securities admitted to trading on a securities market and which has not previously offered securities to the

public. However, this conflicts with the consensus provided by market participants.

0 10 20 30 40 50 60 70 80

Prospectus Approval

Credit Rating

Listing

Days


113


Fee Type Minimum



Prospectus Approval433 2,118 10,000 100,000 -


Stock Exchange Maintenance Fee (p/a)435 1,700 500 3,400 3,400


Total 5,858 11,752 108,752 8,500




Debt / EBITDA




Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth




Callability440




432 Based on the model issuer parameters outlined in Section 2.4 433 Source: Securities Commission of the Republic of Serbia, July 2019. The fee is 0.20% of the nominal value of the issue of

securities, with a minimum fee of 250,000 RSD. 434 Source: Belgrade Stock Exchange, July 2019. Cost: Prime Listing – 0.02% of issue value. Standard Listing – 0.02% of issue

value. Open Market – 100,000 RSD. MTF BELEX - 65.000 RSD. Minimum fees: Prime Listing - 240.000 RSD, Standard Listing -

120.000 RSD. Cap: Prime Listing - 600.000 RSD, Standard Listing - 360.000 RSD. Prime listing used in this fee calculation. 435 Source: Belgrade Stock Exchange. Fee for Prime Listing – 0.01% of issue value. Standard Listing – 0.01% of issue value,

Open Market - 35.000 RSD. MTP BELEX – 25,000 RSD. Minimum fees are as follows: Prime - 200,000 RSD. Standard - 120,000

RSD. CAP: Prime - 400,000 RSD, Standard - 240,000 RSD. 436 Source: : Central Securities Depository and Clearing House, July 2019 437 Source: Market Participant Questionnaire, November 2019 438 EBITDA or EBIT / Interest 439 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 440 Source: Market Participant Questionnaire, November 2019 441 Source: Market Participant Questionnaire, November 2019


114

16.5. Trading

Trading Systems



(BELEXFIX) 0


(Bloomberg EBOND platform) 43,132




Corporate Bonds

OTC


Corporate Bonds

Fees



Fee per

transaction

(€)

Stock Exchange Trading Fees 445 10 43 43

ATS Trading Fees 446 - - -

Brokerage fees447 3 - 300

Total 13 43 343

442 Source: Belgrade Stock Exchange, July 2019 443 Source: Market Participant Questionnaire, and author’s calculations, January 2020. The calculation assumes that access to

the Bloomberg auctioning system is $24,000 per terminal (x2 terminals used for calculation). 444 Source: Market Participant Questionnaire, November 2019 445 Source: Belgrade Stock Exchange, July 2019. Prime Listing: 0.1% capped at 5,000 RSD. Standard Listing: 0.1% capped 5,000

RSD. Open Market: 0.1% capped at 10,000 RSD. MTF BELEX: 0.1% capped 20,000 RSD. 446 Source: Market Participant Questionnaire, November 2019 447 Source: Market Participant Questionnaire, November 2019. For smaller transactions, fees can go up to 30bps, however 3 is

the modal average which is used in this calculation.


115


Settlement fees


CSD clearing & settlement transaction fees448 13.75 13.75

Custodian Settlement Fees449 1 100 100

Total Settlement Fees 113.75

Safekeeping Fees





16.7. Taxation

Tax Matrix452







16.8. Fee Analysis



448 Source: Central Securities Depository and Clearing House, July 2019. The fees are for on exchange transaction.

Government bonds OTC would be €45.83. Corporate Bonds OTC would be €1,100. 449 Source: Market Participant Questionnaire, November 2019. The average fee is 12.5 bps per transaction, but there are

generally caps on fees. 450 Source: Central Securities Depository and Clearing House, July 2019. There are no safekeeping fees, but there are fees for

beneficial owners and the issuer at maturity. Fees which are charged to beneficial owner: Coupon payment on maturity date:

€5.5 per coupon amount of €10,000.Principal payment on maturity date: €45.83 for a principal amount of €2,500,000.

Coupon income per annum is €1mn from the model. Assumed that 2 securities from portfolio mature each year, both with

principal of €2.5mn. Fees which are charged to issuer: Principal payment on maturity date: 45.83 EUR for principal amount of

2.500.000 EUR. Application for coupon and principal payment: €504.17 for 10 applications. Publication of notice: €100.83 for

10 publications. Assumptions used in this calculation are: 2 bonds maturing annually; coupon income of €1,000,000 in line

with the model portfolio. 451 Source: Market Participant Questionnaire, November 2019 452 Source: Market Participant Questionnaire, November 2019


116





Ongoing Fees456 500 3,400

Total Cost457 11,752 108,752

Portfolio Costs



Natural Person - (€ per annum)

Stock Exchange ATS



Indirect Trading Costs459 1,000 - -


Safekeeping 25,642 25,642 25,642

Tax460 - 300,000 -



Stock Exchange ATS



Indirect Trading Costs462 1,000 - -


Safekeeping 25,642 25,642 25,642

Tax463 - 300,000 -


453 Source: Various sources outlined previously in this section. Based on an issuance amount of €5mn. For further information










117

17. Slovak Republic Factsheet

17.1. Overview

Cost Effectiveness



Issuance Efficiency





Rank

8






Rank



Score

55 Out of 100

Score

70 Out of 100


118














Government Bonds

Corporate Bonds

There are no requirements that mean Government and Corporate bonds have to be listed on the

Stock Exchange.

464 Source: Market Participant Questionnaire, November 2019 465 Government Bond Yield Source: World Government Bonds, January 2020, accessible at:

http://www.worldgovernmentbonds.com/country/slovakia/ 466 Corporate Bond Yield Source: Cbonds, January 2020 - Corporate Bond Yield has been constructed using a number of A-

rated bonds, primarily from banks. 467 Source: Bratislave Stock Exchange / Narodna Banka Slovenska, July 2019

-0.8%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1 5 7 10 30

Yie

ld

Maturity

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2 5 7 10 30

Yie

ld

Maturity


119

Liquidity


LCY EUR Other

Government 34,339

Corporate 2,338 33

There are no currency issuing restrictions for bond issuance in the Slovak Republic.469



Government 2

Corporate 18


LCY EUR Other

Government 37,878

Corporate 2,010 32,894

Issuance in the Slovak Republic tends to be denominated in Euros, with a small fraction of

outstanding bonds issued in other currencies. The market value of Government Bonds issued in

2018 far exceeds that of corporate bonds, which is also reflected in the total value of outstanding

listed bonds. Despite this, there were many more Corporate Bonds issued in 2018 than there were

Government Bonds, they just had a smaller market value.

Liquidity Indicators of Listed Bonds in 2018 (€)

Trading Volume (€)472 LCY EUR Other

Government

Corporate 463,865,104

Turnover Ratio (%)473

Government

Corporate 19.8%

468 Source: Bratislave Stock Exchange, July 2019 469 Source Market Participant Questionnaire, November 2019 470 Source: Bratislave Stock Exchange, July 2019 471 Source: Bratislave Stock Exchange, July 2019 472 Source: Bratislave Stock Exchange, July 2019 473 Source: Bratislave Stock Exchange, July 2019 / Author’s calculations, January 2020


120

Market Participants



12 22 0



Structure


Auction Frequency476 Monthly

Auction Type477 Competitive Tender Award at Uniform Minimum Price

Accessibility


Do Primary Dealers / Market Makers have preferential

access?479 No



Are there auction bid channels for retail investors?482 No




474 Source: Narodna Banka Slovenska, July 2019 475 Source: Market Participant Questionnaire, November 2019 476 Source: Market Participant Questionnaire, November 2019 477 Source: Market Participant Questionnaire, November 2019 478 Source: Market Participant Questionnaire, November 2019 479 Source: Market Participant Questionnaire, November 2019 480 Source: Market Participant Questionnaire, November 2019 481 Source: Market Participant Questionnaire, November 2019 482 Source: Market Participant Questionnaire, November 2019 483 Source: Market Participant Questionnaire, November 2019

0 2 4 6 8 10 12 14 16 18

Notification

Bidding

Award

Days


121

Government Bond auctions are timetabled at regular intervals of one month. At auction, bonds are

awarded according to competitive tender at uniform minimum price. There are primary dealers /

market makers at these auctions, however they do not have preferential access and the primary

auction is also accessible to regulated intermediaries, though not to retail investors. The average

number of days to auction is 16, though this is predominated by the notice period before the

auction of 14 days.


Cost (€)


(Bloomberg) € 43,132

Fees paid for bid Submission485 €0

The electronic auction processing system is provided by Bloomberg. Hence, in order to access

Government Bond auctions, one needs access to a Bloomberg terminal which is expensive relative

to other electronic auction processing systems that are purpose-built.



Requirements to issue a corporate bond

Prospectus

Approval486 Credit Rating487


Stock Exchange488 Other489

Required

Receiving a credit rating and being listed on the local stock exchange are not necessary to issue a

Corporate Bond. Prospectus Approval is only necessary for public offerings, not private placement.

Shelf registration is also required and a summary prospectus for small issues.490

484 Source: Market Participant Questionnaire, November 2019 / Author’s calculations, January 2020. The calculation assumes

that access to the Bloomberg auctioning system is $24,000 per terminal (x2 terminals used for calculation). 485 Source: Market Participant Questionnaire, November 2019 486 Source: Market Participant Questionnaire, November 2019. However, the National Bank of Slovakia stated that prospectus

approval was not required. In the Act on Securities and Investment Services 566/2001, Article 125 (1) states that “No

prospectus shall be published until it has been approved.” Can be accessed here:

http://www.nbs.sk/_img/Documents/_Legislativa/_BasicActs/A566-2001.pdf. There are no private placement rules according to

the Stock Exchange and National Bank and the obligation to publish a prospectus does not apply to private placement

according to Act 566/2001. This is backed up by Act A530/1990 Act on Bonds Article 3 (11) which suggests that a prospectus is

not always necessary. 487 Source: Narodna Banka Slovenska, July 2019 / Market Participant Questionnaire, November 2019 488 Source: Narodna Banka Slovenska, July 2019 / Market Participant Questionnaire, November 2019 489 Source: Market Participant Questionnaire, November 2019. The Market Participant(s) said that there were other

requirements, referring to this document:

www.bsse.sk/Portals/2/Issuers%20Guide/2017/Corp_Bonds_Issuance_March2017_EN.pdf However, other conditions

necessary for listing could not be found, beyond normal expectations for the terms of issue. 490 Source: Narodna Banka Slovenska, July 2019

http://www.nbs.sk/_img/Documents/_Legislativa/_BasicActs/A566-2001.pdf

http://www.bsse.sk/Portals/2/Issuers%20Guide/2017/Corp_Bonds_Issuance_March2017_EN.pdf


122

Average Number of Days to Issue


Average Number of Days 10 10

The average number of days to Corporate Bond issuance is 10 days, due to the time taken for

prospectus approval. However, there are no requirements for private placement, meaning

Corporate Bonds can be issued with no time delay.


Fee Type Minimum



Prospectus Approval493 650 650 650 650


Stock Exchange Maintenance Fee (p/a)495 0 10,000 10,000 0

CSD Issuance Fee496 601 3,007 26,443 600,000

Total 3,751 16,157 44,593 610,650

491 Source: Market Participant Questionnaire, November 2019. 492 Based on model issuer parameters 493 Source: Narodna Banka Slovenska, July 2019 494 Source: Bratislave Stock Exchange, July 2019. Fees are for listed market(s). Listing fee for regulated free market is €3,500.

The listing fee in the listed market for the bottom band is €2,500 and for the top band is €10,000, there are fixed fees in 4 size

bands. Fees can be found here:

http://www.bsse.sk/Portals/2/BSSE%20Regulations/Stock%20Exchange%20Rules/Fee%20Order%2001012019/Fee%20Order_f

rom01012019.pdf 495 Source: Bratislave Stock Exchange, July 2019. Parallel listed market: €4,000, Regulated free market: €700 496 Source: Centrálny depozitár cenných papierov SR, July 2019. CSD Issuance fees can be found in: https://www.ncdcp.sk/na-

stiahnutie/subory/2017-10-30-ncdcp-general-fees-web.pdf

0 2 4 6 8 10 12

Prospectus Approval

Credit Rating

Listing

Days

http://www.bsse.sk/Portals/2/BSSE%20Regulations/Stock%20Exchange%20Rules/Fee%20Order%2001012019/Fee%20Order_from01012019.pdf


https://www.ncdcp.sk/na-stiahnutie/subory/2017-10-30-ncdcp-general-fees-web.pdf

https://www.ncdcp.sk/na-stiahnutie/subory/2017-10-30-ncdcp-general-fees-web.pdf


123




Debt / EBITDA




Debt / Equity

Debt / Assets

Total Assets

Tangible Net Worth




Callability500

No callable features were identified as typical features of bond issue.


Annual / biannual financial reports and any change in financial situation that could cause a change in

the price of bonds.

17.5. Trading

Trading Systems


Stock Exchange Trading System502 0

Alternative Trading System (ATS)503 43,132504

The Electronic Stock Exchange Trading System (EBOS) enables the trading of both Government and

Corporate Bonds and has no annual fee for access. The Alternative Trading System is provided by

Bloomberg and therefore the annual fee is calculated according to the cost of terminal access.

Bonds can also be traded OTC.505

497 Source: Market Participant Questionnaire, November 2019 498 EBITDA or EBIT / Interest 499 EBITDA / (Total Debt Service + Capital Expenditures + Taxes 500 Source: Market Participant Questionnaire, November 2019 501 Source: Market Participant Questionnaire, November 2019 502 Source: Bratislave Stock Exchange, July 2019 503 Source: Market Participant Questionnaire, November 2019 504 Author’s calculations, January 2020. The calculation assumes that access to the Bloomberg auctioning system is $24,000

per terminal (x2 terminals used for calculation). 505 Source: Market Participant Questionnaire, November 2019


124




Corporate Bonds 101-250 101-250 101-250 101-250 101-250 101-250

OTC


Corporate Bonds 101-250 101-250 101-250 101-250 101-250 101-250

Fees



Fee per

transaction

(€)

Stock Exchange Trading Fees 507 1 8 332 332

ATS Trading Fees 508

Brokerage fees509 25 7 700

Total 26 15 332 1,032

According to the model portfolio average trade size of €1,000,000, Stock Exchange Trading fees

would cap out the fee per transaction at €332. ATS trading fees within the Bloomberg system are

unknown. Brokerage fees at 7bps would generate fees of €700 per trade, meaning total fees per

transaction are €1,032.



Settlement fees



Custodian Settlement Fees511 17 17 17

Total Settlement Fees 17 25 17

506 Source: Market Participant Questionnaire, November 2019 507 Source: Bratislave Stock Exchange, July 2019. Fees can be accessed here:

http://www.bsse.sk/Portals/2/BSSE%20Regulations/Stock%20Exchange%20Rules/Fee%20Order%2001012019/Fee%20Order_f

rom01012019.pdf 508 Source: Market Participant Questionnaire, November 2019. No information on Bloomberg trading fees could be found. 509 Source: Market Participant Questionnaire, November 2019 510 Source: Centrálny depozitár cenných papierov SR, July 2019 511 Source: Market Participant Questionnaire, November 2019




125

Safekeeping Fees

Fee Type (per annum) Flat fee (€) % (bps) Cap (€)

CSD Safekeeping fees512 0 0.18 144,000

Custodian Safekeeping Fees513 0 11 0

Total Safekeeping Fees 0 11.18 144,000

17.7. Taxation

Tax Matrix514







17.8. Fee Analysis







Ongoing Fees518 10,000 10,000

Total Cost519 16,157 44,593

512 Source: Centrálny depozitár cenných papierov SR, July 2019 513 Source: Market Participant Questionnaire, November 2019 514 Source: Market Participant Questionnaire, November 2019 515 Source: Various sources outlined previously in this section. Based on an issuance amount of €5mn. For further information




126

Portfolio Costs




Stock Exchange ATS



Indirect Trading Costs521 7,500 12,500 0 350

Settlement & Clearing 1,240 1,240 1,240 1,240

Safekeeping 27,950 27,950 27,950 27,950

Tax522 0 190,000 0 190,000

Total Trading Cost 88,290 283,290 107,322 297,672


Stock Exchange ATS



Indirect Trading Costs524 7,500 12,500 0 350

Settlement & Clearing 1,240 1,240 1,240 1,240

Safekeeping 27,950 27,950 27,950 27,950

Tax525 0 0 0 0

Total Trading Cost 88,290 93,290 107,322 107,322








Appendix 1 – Data Table

Section Item

Federation of

Bosnia and

Herzegovina

(B&H)

Republika

Srpska (B&H) Bulgaria Croatia Montenegro

North

Macedonia Romania Serbia Slovak Republic

Market Dynamics Treasury Fixed Rate [2yr] Yes No Yes Yes Yes Yes Yes Yes Yes

Market Dynamics Treasury Fixed Rate [5yr] Yes Yes Yes Yes Yes Yes Yes Yes Yes

Market Dynamics Treasury Fixed Rate [7yr] Yes Yes Yes Yes Yes No Yes Yes Yes

Market Dynamics Treasury Fixed Rate [10yr] Yes Yes Yes Yes Yes Yes Yes Yes Yes

Market Dynamics Treasury Fixed Rate [30yr] No No Yes No No Yes No No Yes

Market Dynamics Treasury Floating Rate [2yr] No No No Yes No No No Yes Yes

Market Dynamics Treasury Floating Rate [5yr] No No Yes Yes No No No No Yes

Market Dynamics Treasury Floating Rate [7yr] No No Yes Yes No No No No Yes

Market Dynamics Treasury Floating Rate [10yr] No No No Yes No No No No Yes

Market Dynamics Treasury Floating Rate [30yr] No No No No No No No No No

Market Dynamics Treasury Inflation Linked [2yr] No No No No No No No No No





Market Dynamics Corporate Bonds (Fixed Rate) [2yr] Yes Yes Yes Yes Yes Yes Yes Yes Yes

Market Dynamics Corporate Bonds (Fixed Rate) [5yr] Yes Yes Yes Yes Yes Yes Yes Yes Yes

Market Dynamics Corporate Bonds (Fixed Rate) [7yr] Yes No Yes Yes No No Yes No Yes

Market Dynamics Corporate Bonds (Fixed Rate) [10yr] No Yes Yes Yes No No Yes No Yes

Market Dynamics Corporate Bonds (Fixed Rate) [30yr] No No No No No No No No No

Market Dynamics Corporate Bonds (Floating Rate) [2yr] No No Yes Yes No No No Yes Yes

Market Dynamics Corporate Bonds (Floating Rate) [5yr] No No Yes Yes Yes No No Yes Yes

Market Dynamics Corporate Bonds (Floating Rate) [7yr] No No Yes No No No No No Yes

Market Dynamics Corporate Bonds (Floating Rate) [10yr] No No No No No No No No Yes

Market Dynamics Corporate Bonds (Floating Rate) [30yr] No No No No No No No No No

Market Dynamics Repos with Central Banks [2yr] No No No Yes No Yes No Yes No

Market Dynamics Repos with Central Banks [5yr] No No No Yes No No No No No

Market Dynamics Repos with Central Banks [7yr] No No No No No No No No No



Market Dynamics Repos with Market Participants [2yr] No Yes No Yes No Yes No Yes No

Market Dynamics Repos with Market Participants [5yr] No No No No No No No No No


Market Dynamics Repos with Market Participants [10yr] No Yes No No No No No No No


Market Dynamics Government Bond Yield [2yr] 0.00% 1.73% -0.46% 0.16% 0.00% 0.00% 3.55% 2.10% -0.53%

Market Dynamics Government Bond Yield [5yr] 0.00% 1.95% -0.11% 0.20% 0.00% 0.00% 3.92% 2.95% -0.20%

Market Dynamics Government Bond Yield [7yr] 0.00% 1.94% 0.06% 0.00% 1.98% 0.00% 3.99% 2.88% -0.04%

Market Dynamics Government Bond Yield [10yr] 0.00% 1.95% 0.28% 0.61% 2.63% 0.00% 4.41% 2.90% 0.04%


128

Section Item

Federation of

Bosnia and

Herzegovina

(B&H)

Republika


North


Market Dynamics Government Bond Yield [30yr] 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.84%

Market Dynamics Corporate Bond Yield [2yr] 0.00% 4.75% 0.36% 0.00% 5.15% 0.00% 0.00% 0.00% -0.06%

Market Dynamics Corporate Bond Yield [5yr] 0.00% 5.64% 1.56% 1.90% 5.46% 0.00% 3.94% 0.00% 0.06%




Market Dynamics Does it have to be listed on the Stock

Exchange? (Government Bonds) No Yes No No Yes No No No No

Market Dynamics Are there Private Placement rules?

(Government Bonds) Yes No No No Yes No No Yes No

Market Dynamics Does it have to be listed on the Stock

Exchange? (Corporate Bonds) No Yes No No Yes No No No No

Market Dynamics Are there Private Placement rules?

(Corporate Bonds) Yes Yes Yes No Yes Yes No Yes No

Market Dynamics Total Value of Outstanding Listed

Government Bonds [LCY] 593,414,187 556,843,58 2,102,692,974 8,928,878,710 1,056,196,723 10,995,350,000 8,109,719,057


Government Bonds [EUR] 669,105,000 5,535,228,379 308,604,216 48,900,000 4,150,000,000 34,339,360,000


Government Bonds [Other]


Corporate Bonds [LCY] 61,253,725 4,067,006 129,736,122 476,445,019 2,493,250,000


Corporate Bonds [EUR] 841,037,494 69,449,935 14,000,000 5,000,000 2,037,525,000 2,338,096,700


Corporate Bonds [Other] 32,720,923.05

Market Dynamics Market Value of Government Bonds

issued/listed in 2018 [LCY] 372,297,540 90,409,217 2,365,376,831 8,028,329,003 2,568,750,000 8,884,674,004


issued/listed in 2018 [EUR] 797,003,211 5,086,296,005 145,006,357 55,122,400 4,284,378,825 37,877,756,600


issued/listed in 2018 [Other]

Market Dynamics Market Value of Corporate Bonds

issued/listed in 2018 [LCY] 9,005,226 684,117 130,871,229 438,398,722 300,000,000


issued/listed in 2018 [EUR] 842,608,661 68,598,008 14,180,000 915,000,000 2,009,925,077


issued/listed in 2018 [Other]

32,893,552.64

Market Dynamics Trading Volume of Government Bonds

in 2018 [LCY] 12,596,611 154,699,925 12,679,668 73,631,724 129,766,274 335,308,411


in 2018 [EUR] 12,115,787 21,324,195 2,688,791 8,531,184 129,981,132


in 2018 [Other]

Market Dynamics Trading Volume of Corporate Bonds in

2018 [LCY] 199,154 1,781,763 9,175,025 3,401,613 2,024,247,408


2018 [EUR] 17,233,799 632,406 551,665 100,000 4,500,000 463,865,104


129

Section Item

Federation of

Bosnia and

Herzegovina

(B&H)

Republika


North



2018 [Other]

Market Dynamics Number of Government Bonds Listed in

2018 4.00 7.00 1.00 1.00 2.00 4.00 11.00 2.00

Market Dynamics Number of Corporate Bonds Listed in

2018 1.00 6.00 16.00 1.00 18.00

Market Dynamics Turnover Ratio of Government Bonds

(LCY) 2.12% 27.78% 0.60% 0.82% 0.00% 1.18% 4.13%


(EUR) 1.81% 0.39% 0.87% 17.45% 3.13% 0.00%


(Other)

Market Dynamics Turnover Ratio of Corporate Bonds

(LCY)

0.00 43.81% 7.07% 0.71% 81.19%


(EUR) 2.05% 0.91% 3.94% 2.00% 0.22% 19.84%


(Other) 0.00%

Market Dynamics Number of Entities Authorised to Carry

Out Banking 16.00 8.00 26.00 20.00 13.00 14.00 24.00 26.00 12.00


Out Brokerage 6.00 5.00 65.00 27.00 2.00 5.00 20.00 2.00 22.00


Out Market Making 2.00 1.00 2.00

Auction Process Type of Auction Schedule Timetabled

(regular)

Timetabled

(regular)

Ad hoc

(irregular)

Ad hoc

(irregular)

Ad hoc

(irregular)

Timetabled

(regular)

Timetabled

(regular)

Timetabled

(regular)

Timetabled

(regular)

Auction Process Auction Frequency 90.00 60.00 19.00 11.00 7.00 22.00 30.00

Auction Process Auction Type

Competitive

Tender Award

at Bid Price

(Dutch-Style

Auction)

Competitive

Tender Award

at Uniform

Minimum Price

Competitive

Tender Award at

Bid Price (Dutch-

Style Auction)

Competitive

Tender Award at

Uniform

Minimum Price

Competitive

Tender Award

at Bid Price

(Dutch-Style

Auction)

Ad Hoc (Non-

Competitive

Tender)

Competitive

Tender Award at

Bid Price (Dutch-

Style Auction)

Competitive

Tender Award at

Uniform

Minimum Price

Competitive

Tender Award at

Uniform Minimum

Price

Auction Process Are there Primary Dealers/Market

Makers? No No Yes No Yes No Yes No Yes

Auction Process

Do Primary Dealers/Market Makers

have preferential access to government

bond auctions?

No No No No No No Yes No No

Auction Process Is the Auction Process Accessible to

Regulated Intermediaries? Yes Yes Yes Yes Yes Yes Yes Yes Yes

Auction Process Is the Auction Accessible by Retail? Yes Yes Yes No Yes No No Yes No

Auction Process

Are there competitive and non-

competitive government bond auction

bid channels for retail investors?

Competitive Competitive

Bid Channel Competitive

- Both Non-competitive Competitive Both

-

Auction Process Notification 12.00 8.00 9.00 2.00 10.00 6.00 8.00 3.00 14.00

Auction Process Bidding 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Auction Process Award 1.00 3.00 1.00 1.00 2.00 1.00 1.00 2.00 1.00

Auction Process Total Average Number of Days to

Auction 14.00 12.00 11.00 4.00 13.00 8.00 10.00 6.00 16.00


130

Section Item

Federation of

Bosnia and

Herzegovina

(B&H)

Republika


North


Auction Process Electronic Auction Processing System

Exist Yes Yes Yes Yes Yes Yes Yes Yes Yes


Name

Sarajevo Stock

Exchange

Trading System

(BTS)

BSt-T

Banjaluka

Stock

exchange

system for

trading

Government

Securities

Auction System

Bloomberg

Auction System

Montenegro

stock exchange

Electronic

system for

market

operations of

National bank of

North

Macedonia

SaFIR PDA Auction

platform Bloomberg


Cost to user 2,760.98 1,840.65 3,681.29 43,131.62 3,000.00 43,131.62

Auction Process Fees paid for bid Submission 502.50

500.00

2.22

Corporate Bond

Issuance Prospectus Approval [Small Issue] Yes Yes No Yes Yes Yes Yes No Yes

Corporate Bond

Issuance Prospectus Approval [Large Issue] Yes Yes No Yes Yes Yes Yes No Yes

Corporate Bond

Issuance Shelf Registration No Yes No Yes Yes No Yes No Yes

Corporate Bond

Issuance Summary Prospectus for small issues Yes Yes No No Yes No Yes No Yes

Corporate Bond

Issuance

Is Credit Rating necessary for issuing

[Small Issue] No No No No No No No No No

Corporate Bond

Issuance

Is Credit Rating necessary for issuing

[Large Issue] No No No No No No No No No

Corporate Bond

Issuance

Does the Bond have to be listed [Small

Issue] No Yes No No Yes No No No No

Corporate Bond

Issuance

Does the Bond have to be listed [Large

Issue] No Yes No No Yes No No No No

Corporate Bond

Issuance Other [Small Issue] No No No No No Yes Yes Yes Yes

Corporate Bond

Issuance Other [Large Issue] No No No No No Yes Yes Yes Yes

Corporate Bond

Issuance Currency Issuing Restrictions No No No No

It is possible to

issue and trade

bonds only in

local currency,

EUR.

No

You can only

issue bonds in

RON and EUR.

Prior to the

issuance of

financial

instruments

denominated in

a foreign

currency, the

issuer must

obtain the

approval from

the National

Bank of Serbia.

(Article 9. Law on

Capital markets)

No

Corporate Bond

Issuance Prospectus 21.00 16.00 60.00 12.00 60.00 25.00 45.00 10.00


131

Section Item

Federation of

Bosnia and

Herzegovina

(B&H)

Republika


North


Corporate Bond

Issuance Credit Rating

Corporate Bond

Issuance Listing 9.00 7.00 5.00 5.00 10.00 22.00 30.00 15.00 30.00

Corporate Bond

Issuance Other 15.00 16.00

Corporate Bond

Issuance Total Days to Issue 30.00 23.00 5.00 65.00 22.00 82.00 70.00 76.00 40.00

Corporate Bond

Issuance Prospectus Approval [Minimum] 500.00 511.18 300.00 487.50 2,117.86 650.00

Corporate Bond

Issuance

Prospectus Approval [Small Issue

Average] 5,000.00 7,500.00 542.00 15,000.00 7,500.00 3,557.10 10,000.00 650.00

Corporate Bond

Issuance

Prospectus Approval [Large Issue

Average] 7,500.00 75,000.00 542.00 150,000.00 75,000.00 26,057.10 100,000.00 650.00

Corporate Bond

Issuance Prospectus Approval [Cap] 7,500.00 106,767.10 650.00

Corporate Bond

Issuance Stock Exchange Listing Fees [Minimum] 500.00 150.00 2,699.00 163.00 320.00 2,040.00 2,500.00

Corporate Bond

Issuance

Stock Exchange Listing Fees [Small

Issue Average] 500.00 325.00 256.00 2,699.00 500.00 500.00 549.00 1,000.00 2,500.00

Corporate Bond

Issuance

Stock Exchange Listing Fees [Large

Issue Average] 500.00 500.00 256.00 6,749.00 100.00 1,626.00 549.00 5,100.00 7,500.00

Corporate Bond

Issuance Stock Exchange Listing Fees [Cap] 500.00 500.00 6,749.00 - 1,626.00 - 5,100.00 10,000.00

Corporate Bond

Issuance

Stock Exchange Maintenance Fee (p/a)

[Minimum] 1,750.00 250.00 - 2,130.00 - - 300.00 1,700.00 -

Corporate Bond

Issuance


[Small Issue Average] 1,750.00 2,125.00 511.00 2,130.00 8,000.00 650.00 549.00 500.00 10,000.00

Corporate Bond

Issuance


[Large Issue Average] 2,500.00 5,000.00 511.00 2,130.00 10,500.00 650.00 549.00 3,400.00 10,000.00

Corporate Bond

Issuance


[Cap] 2,500.00 5,000.00 - 2,130.00 - - - 3,400.00 -

Corporate Bond

Issuance CSD Issuance Fee [Minimum] 154.67 - 766.94 - 620.00 715.00 177.59 - 601.00

Corporate Bond

Issuance CSD Issuance Fee [Small Issue Average] 741.55 600.00 818.06 540.00 1,215.00 820.00 177.59 252.45 3,007.00

Corporate Bond

Issuance CSD Issuance Fee [Large Issue Average] 894.94 600.00 818.06 540.00 1,665.00 1,040.00 177.59 252.45 26,443.00

Corporate Bond

Issuance CSD Issuance Fee [Cap] 894.94 - 2,556.45 - - 1,040.00 30,444.48 - 600,000.00

Corporate Bond

Issuance

Total Corporate Bond Issuance Fees

[Minimum] 2,904.67 911.18 766.94 4,829.00 920.00 1,365.50 797.59 5,857.86 3,751.00

Corporate Bond

Issuance


[Small Issue Average] 7,991.55 10,550.00 1,585.06 5,911.00 24,715.00 9,470.00 4,832.69 11,752.45 16,157.00

Corporate Bond

Issuance


[Large Issue Average] 11,394.94 81,100.00 1,585.06 9,961.00 162,265.00 78,316.00 27,332.69 108,752.45 44,593.00

Corporate Bond

Issuance


[Cap] 11,394.94 5,500.00 2,556.45 8,879.00 - 2,666.00 137,211.58 8,500.00 610,650.00


132

Section Item

Federation of

Bosnia and

Herzegovina

(B&H)

Republika


North


Corporate Bond

Issuance Debt / EBITDA [Rare] Yes Yes Yes No No No No Yes Yes

Corporate Bond

Issuance Debt / EBITDA [Sometimes] No No No Yes Yes Yes Yes No No

Corporate Bond

Issuance Debt / EBITDA [Common] No No No No No No No No No

Corporate Bond

Issuance

Debt / (EBITDA - Capital Expenditures)

[Rare] Yes Yes Yes No No No Yes Yes Yes

Corporate Bond

Issuance


[Sometimes] No No No Yes Yes Yes No No No

Corporate Bond

Issuance


[Common] No No No No No No No No No

Corporate Bond

Issuance Interest Coverage [Rare] Yes No No No No No No Yes Yes

Corporate Bond

Issuance Interest Coverage [Sometimes] No Yes No Yes Yes Yes Yes No No

Corporate Bond

Issuance Interest Coverage [Common] No No Yes No No No No No No

Corporate Bond

Issuance Fixed Charge Coverage [Rare] Yes No Yes Yes No No Yes Yes Yes

Corporate Bond

Issuance Fixed Charge Coverage [Sometimes] No Yes No No Yes Yes No No No

Corporate Bond

Issuance Fixed Charge Coverage [Common] No No No No No No No No No

Corporate Bond

Issuance Debt / Equity [Rare] No No No No No No No Yes Yes

Corporate Bond

Issuance Debt / Equity [Sometimes] No Yes No Yes Yes Yes Yes No No

Corporate Bond

Issuance Debt / Equity [Common] Yes No Yes No No No No No No

Corporate Bond

Issuance Debt / Assets [Rare] No No No No No No No Yes Yes

Corporate Bond

Issuance Debt / Assets [Sometimes] No Yes No Yes Yes Yes Yes No No

Corporate Bond

Issuance Debt / Assets [Common] Yes No Yes No No No No No No

Corporate Bond

Issuance Total Assets [Rare] No No Yes No No No Yes Yes Yes

Corporate Bond

Issuance Total Assets [Sometimes] Yes Yes No Yes Yes Yes No No No

Corporate Bond

Issuance Total Assets [Common] No No No No No No No No No

Corporate Bond

Issuance Tangible Net Worth [Rare] Yes No Yes Yes No No Yes Yes Yes

Corporate Bond

Issuance Tangible Net Worth [Sometimes] No Yes No No Yes Yes No No No

Corporate Bond

Issuance Tangible Net Worth [Common No No No No No No No No No


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Corporate Bond

Issuance Dividend Pay-out Ratio [Rare] Yes No No Yes No Yes No Yes Yes

Corporate Bond

Issuance Dividend Pay-out Ratio [Sometimes] No Yes Yes No Yes No Yes No No

Corporate Bond

Issuance Dividend Pay-out Ratio [Common] No No No No No No No No No

Corporate Bond

Issuance


[Rare] Yes No No No Yes Yes No Yes Yes

Corporate Bond

Issuance


[Sometimes] No Yes No Yes No No Yes No No

Corporate Bond

Issuance


[Common] No No Yes No No No No No No

Corporate Bond

Issuance

Restrictions on Change of Control

[Rare] Yes No No No Yes Yes No Yes Yes

Corporate Bond

Issuance


[Sometimes] No Yes No Yes No No Yes No No

Corporate Bond

Issuance


[Common] No No Yes No No No No No No

Corporate Bond

Issuance Typical callable features None

Early

redemption of

bonds: The

issuer may, at

any time,

redeem the

bonds at any

market price or

otherwise,

provided that,

in the case of a

public offering,

such an offer is

equally

available to all

bondholders

and such an

offer is

consistent with

legal

provisions. No

bond holder is

required to

accept the

Issuer's offer

or sell any

number of

bonds in its

possession.

Call option close

to expiry;

European style

call options;

Strike price at

par or higher

None None None None None None

Corporate Bond

Issuance Typical disclosure requirements

Annual and

financial

report, audit

Annual audit

and financial

reports

if the issue is

traded on a

stock exchange

None None

Basic and

historical data,

organisational

Conflict of

interest None

Annual and

biannual financial

reports, changes


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report, other

sensitive

information

like increase

yearly sales

more than 10

%, change of

key person

they disclose

regular financial

information -

interim

(quarterly) and

annual

structure,

employees, main

shareholders,

financial data,

management.

in financial

situation that

could cause a

change in the

price of shares

Trading Name of the Stock Exchange Trading

System

Berzanski

Sistem

Trgovine (BTS)

Exchange

Trading System

(QuickTrade)

Xetra T7 Xetra

BTS trading

system version

2.6

BEST

ARENA

AUTOMATED

EXCHANGE

PLATFORM

BELEXFIX

Electronic Stock

Exchange Trading

System (EBOS)

Trading Can Government Bonds be traded? Yes Yes Yes Yes Yes Yes Yes Yes Yes

Trading Can Corporate Bonds be traded? Yes Yes Yes Yes Yes Yes Yes Yes Yes

Trading Cost of the trading system 2,147.00 3,681.30 1,175.97 520.00 8,000.00 2,400.00 320.00 - -

Trading Name of the Alternative Trading System No No

Electronic

System for

Registration and

Servicing of

Trade in

Government

Securitites

(ESROT)

No No No

BSE ALTERNATIVE

TRADING SYSTEM

(AeRO)

Bloomberg

EBOND platform Bloomberg

Trading Can Government Bonds be traded? - - Yes - - - No Yes Yes

Trading Can Corporate Bonds be traded? - - No - - - Yes No Yes

Trading Cost of the trading system - - 3,681.29 - - - 422.84 43,131.62 43,131.62

Trading Average Spread in bps (on-the-run

bonds) of 2yr Government Bonds (High) 50.00 20.00 50.00 50.00 100.00 - 10.00 20.00 250.00


bonds) of 2yr Government Bonds (Low) 21.00 11.00 11.00 21.00 51.00 - - - 101.00


bonds) of 5yr Government Bonds (High) 50.00 20.00 250.00 100.00 100.00 50.00 10.00 20.00 250.00


bonds) of 5yr Government Bonds (Low) 21.00 11.00 101.00 21.00 51.00 21.00 - - 101.00


bonds) of 7yr Government Bonds (High) 100.00 20.00 - 100.00 100.00 - 10.00 20.00 250.00


bonds) of 7yr Government Bonds (Low) 51.00 11.00 250.00 21.00 51.00 - - - 101.00

Trading

Average Spread in bps (on-the-run

bonds) of 10yr Government Bonds

(High)

- 20.00 - 250.00 100.00 - 10.00 20.00 250.00


bonds) of 10yr Government Bonds (Low) - 11.00 250.00 21.00 51.00 - - 11.00 101.00

Trading



(High)

- - 250.00 - 100.00 20.00 20.00 - 250.00


bonds) of 30yr Government Bonds (Low) - - 101.00 - 51.00 11.00 11.00 - 101.00

Trading Average Government Bonds (High) 40.00 16.00 183.33 100.00 100.00 14.00 12.00 16.00 250.00


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Trading Average Government Bonds (Low) 18.60 8.80 142.60 16.80 51.00 6.40 2.20 2.20 101.00


bonds) of 2yr Coporate Bonds (High) 250.00 - 250.00 100.00 250.00 - 50.00 - 250.00


bonds) of 2yr Corporate Bonds (Low) 101.00 - 101.00 51.00 101.00 - 21.00 - 101.00


bonds) of 5yr Corporate Bonds (High) - 250.00 250.00 100.00 250.00 - 50.00 - 250.00


bonds) of 5yr Corporate Bonds (Low) - 101.00 101.00 51.00 101.00 - 21.00 - 101.00


bonds) of 7yr Corporate Bonds (High) - - 250.00 100.00 250.00 - 50.00 - 250.00


bonds) of 7yr Corporate Bonds (Low) - - 101.00 51.00 101.00 - 21.00 - 101.00


bonds) of 10yr Corporate Bonds (High) - - 250.00 100.00 250.00 - 50.00 - 250.00


bonds) of 10yr Corporate Bonds (Low) - - 101.00 51.00 101.00 - 21.00 - 101.00


bonds) of 30yr Corporate Bonds (High) - - - - 250.00 - - - 250.00


bonds) of 30yr Corporate Bonds (Low) - - - - 101.00 - - - 101.00

Trading Average Corporate Bonds (High) 50.00 50.00 250.00 80.00 250.00 - 50.00 - 250.00

Trading Average Corporate Bonds (Low) 20.20 20.20 101.00 40.80 101.00 - 21.00 - 101.00

Trading Can Bonds be Traded OTC? No Yes Yes Yes No Yes Yes Yes Yes


bonds) of 2yr Government Bonds (High) - 20.00 50.00 50.00 - - 10.00 20.00 50.00


bonds) of 2yr Government Bonds (Low) - 11.00 11.00 21.00 - - - - 21.00


bonds) of 5yr Government Bonds (High) - 20.00 250.00 100.00 - 50.00 10.00 20.00 50.00


bonds) of 5yr Government Bonds (Low) - 11.00 11.00 21.00 - 21.00 - - 21.00


bonds) of 7yr Government Bonds (High) - 20.00 250.00 100.00 - - 10.00 20.00 100.00


bonds) of 7yr Government Bonds (Low) - 11.00 21.00 21.00 - - - - 51.00

Trading



(High)

- 20.00 250.00 250.00 - - 10.00 20.00 100.00


bonds) of 10yr Government Bonds (Low) - 11.00 51.00 21.00 - - - 11.00 51.00

Trading



(High)

- - 250.00 - - 20.00 - - 250.00


bonds) of 30yr Government Bonds (Low) - - 101.00 - - 11.00 - - 101.00

Trading Average Government Bonds (High) - 16.00 210.00 100.00 - 14.00 8.00 16.00 110.00

Trading Average Government Bonds (Low) - 8.80 39.00 16.80 - 6.40 - 2.20 49.00


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bonds) of 2yr Corporate Bonds (High) - - 250.00 100.00 - - 50.00 - 250.00


bonds) of 2yr Corporate Bonds (Low) - - 101.00 51.00 - - 21.00 - 101.00


bonds) of 5yr Corporate Bonds (High) - 250.00 250.00 100.00 - - 50.00 - 250.00


bonds) of 5yr Corporate Bonds (Low) - 101.00 101.00 51.00 - - 21.00 - 101.00










bonds) of 30yr Corporate Bonds (High) - - - - - - - - 250.00


bonds) of 30yr Corporate Bonds (Low) - - - - - - - - 101.00

Trading Average Corporate Bonds (High) - 50.00 250.00 80.00 - - 40.00 - 250.00

Trading Average Corporate Bonds (Low) - 20.20 101.00 40.80 - - 16.80 - 101.00

Trading Stock Exchange Trading Fees (Flat Fee) - - - - - - - - -

Trading Stock Exchange Trading Fees (bps) 10.00 2.00 1.00 3.00 9.00 2.50 0.70 10.00 8.00

Trading Stock Exchange Trading Fees

(Minimum) - - 1.02 - - - - - 1.00

Trading Stock Exchange Trading Fees (Cap) - - - - - - - 42.50 332.00

Trading Stock Exchange Fee per Transaction 1,000.00 200.00 100.00 300.00 900.00 250.00 70.00 42.50 332.00

Trading ATS Trading Fees (Flat Fee) - - 5.00 - - - - - -

Trading ATS Trading Fees (bps) - - - - - - 1.00 - -

Trading ATS Trading Fees (Minimum) - - 2.50 - - - - - -

Trading ATS Trading Fees (Cap) - - 5.00 - - - - - -

Trading ATS Fee Per Transaction - - 5.00 - - - 100.00 - -

Trading Brokerage Fees (Flat Fee) - - - - - - - - -

Trading Brokerage Fees (bps) 35.00 20.00 7.50 10.00 17.50 75.00 25.00 3.00 7.00

Trading Brokerage Fees (Minimum) 10.00 4.00 5.00 10.00 10.00 3.00 - - 25.00

Trading Brokerage Fees (Cap) - - - - - - - - -

Trading Brokerage Fees per Transaction 3,500.00 2,000.00 750.00 1,000.00 1,750.00 7,500.00 2,500.00 300.00 700.00

Trading Total Fees (Flat Fee) - - 5.00 300.00 - - - - -

Trading Total Fees (bps) 45.00 22.00 8.50 10.00 26.50 77.50 26.70 13.00 15.00

Trading Total Fees (Minimum) 10.00 4.00 8.52 10.00 10.00 3.00 - - 26.00

Trading Total Fees (Cap) - - 5.00 - - - - 42.50 332.00

Trading Total Fees per Transaction 4,500.00 2,200.00 855.00 1,300.00 2,650.00 7,750.00 2,670.00 342.50 1,032.00

Settlement and

Safekeeping


Transaction Fees 830.00 150.00 0.31 14.00 300.00 1,000.00 32.00 13.75 8.20

Settlement and

Safekeeping


Transaction Fee Cap - - - 14.00 - - 31.71 13.75 -


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Settlement and

Safekeeping Custodian Settlement Fees 25.00 1,500.00 10.00 22.50 1,000.00 16.00 21.00 100.00 16.60

Settlement and

Safekeeping Minimum Custodian settlement fee 10.00 - 10.00 5.00 10.00 - 21.00 1.00 16.60

Settlement and

Safekeeping Custodian settlement fee cap - - - - - 16.00 21.00 100.00 -

Settlement and

Safekeeping Total Settlement Fees 855.00 1,650.00 10.31 36.50 1,300.00 1,016.00 53.00 113.75 24.80

Settlement and

Safekeeping CSD Safekeeping Fee Rate 5.00 0.06 0.02 1.00 - 0.02 0.07 0.26 0.18

Settlement and

Safekeeping CSD Safekeeping Fee 12,500.00 153.39 47.04 2,500.00 - 50.00 177.59 641.66 450.00

Settlement and

Safekeeping CSD Safekeeping Fee Cap 20,451.68 - - 32,400.00 - 725.00 30,444.48 45.83 144,000.00

Settlement and

Safekeeping Custodian Safekeeping Fee Rate 27.50 10.00 5.00 3.00 10.00 20.00 3.00 10.00 11.00

Settlement and

Safekeeping Custodian Safekeeping Fees 68,750.00 25,000.00 12,500.00 7,500.00 25,000.00 50,000.00 7,500.00 25,000.00 27,500.00

Settlement and

Safekeeping Total Safekeeping Fees 81,250.00 25,153.39 12,547.04 10,000.00 25,000.00 50,050.00 7,677.59 25,641.66 27,950.00

Taxation Purchase of Government Bonds (%

marginal tax rate) [Natural Person] 0% 0% 0% 0% 0% 0% 0% 0% 0%

Taxation Purchase of Government Bonds (value)

[Natural Person] - - - - - - - - -

Taxation Purchase of Government Bonds (%

marginal tax rate) [Legal Person] 0% 0% 0% 0% 0% 0% 0% 0% 0%

Taxation Purchase of Government Bonds (value)

[Legal Person] - - - - - - - - -

Taxation Purchase of Corporate Bonds (%


Taxation Purchase of Corporate Bonds (value)

[Natural Person] - - - - - - - - -

Taxation Purchase of Corporate Bonds (%


Taxation Purchase of Corporate Bonds (value)

[Legal Person] - - - - - - - - -

Taxation

Total transaction taxes on purchase of

Government and Corporate Bonds

[Natural Person]

- - - - - - - - -

Taxation

Total transaction taxes on purchase of


[Legal Person]

- - - - - - - - -

Taxation Coupon/Interest on Government Bonds

(% marginal tax rate) [Natural Person] 0% 10% 0% 12% 9% 0% 10% 0% 0%


(value) [Natural Person] - 100,000.00 - 120,000.00 90,000.00 - 100,000.00 - -


(% marginal tax rate) [Legal Person] 10% 0% 0% 0% 9% 0% 16% 0% 0%


138

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(value) [Legal Person] 100,000.00 - - - 90,000.00 - 160,000.00 - -

Taxation Coupon/Interest on Corporate Bonds

(% marginal tax rate) [Natural Person] 0% 10% 0% 12% 9% 10% 10% 15% 19%


(value) [Natural Person] - 100,000.00 - 120,000.00 90,000.00 100,000.00 100,000.00 150,000.00 190,000.00


(% marginal tax rate) [Legal Person] 10% 10% 0% 0% 9% 10% 16% 15% 0%


(value) [Legal Person] 100,000.00 100,000.00 - - 90,000.00 100,000.00 160,000.00 150,000.00 -

Taxation

Total withholding taxes on the

Coupon/Interest of Government and

Corporate Bonds [Natural Person]

- 200,000.00 - 240,000.00 180,000.00 100,000.00 200,000.00 150,000.00 190,000.00

Taxation

Total withholding taxes on the

Coupon/Interest of Government and

Corporate Bonds [Legal Person]

200,000.00 100,000.00 - - 180,000.00 100,000.00 320,000.00 150,000.00 -

Taxation Capital Gain on Government Bonds (%


Taxation Capital Gain on Government Bonds

(value) [Natural Person] 100,000.00 100,000.00 100,000.00 120,000.00 90,000.00 70,000.00 100,000.00 - -

Taxation Capital Gain on Government Bonds (%


Taxation Capital Gain on Government Bonds

(value) [Legal Person] 100,000.00 100,000.00 100,000.00 180,000.00 90,000.00 100,000.00 160,000.00 - 210,000.00

Taxation Capital Gain on Corporate Bonds (%


Taxation Capital Gain on Corporate Bonds (value)

[Natural Person] 100,000.00 100,000.00 100,000.00 120,000.00 90,000.00 70,000.00 100,000.00 150,000.00 -

Taxation Capital Gain on Corporate Bonds (%


Taxation Capital Gain on Corporate Bonds (value)

[Legal Person] 100,000.00 100,000.00 100,000.00 180,000.00 90,000.00 100,000.00 160,000.00 150,000.00 210,000.00

Taxation

Total taxes on the disposition/sale of


[Natural Person]

200,000.00 200,000.00 200,000.00 240,000.00 180,000.00 140,000.00 200,000.00 150,000.00 -

Taxation

Total taxes on the disposition/sale of


[Legal Person]

200,000.00 200,000.00 200,000.00 360,000.00 180,000.00 200,000.00 320,000.00 150,000.00 420,000.00

Fee Analysis Initial Issuance fees (Small Issue) 6,241.55 8,425.00 1,074.06 3,781.00 16,715.00 8,820.00 4,283.69 11,252.45 6,157.00

Fee Analysis Initial Issuance fees (Large Issue) 8,894.94 76,100.00 1,074.06 7,831.00 151,765.00 77,666.00 26,783.69 105,352.45 34,593.00

Fee Analysis Ongoing Fees (Small Issue) 1,750.00 2,125.00 511.00 2,130.00 8,000.00 650.00 549.00 500.00 10,000.00

Fee Analysis Ongoing Fees (Large Issue) 2,500.00 5,000.00 511.00 2,130.00 10,500.00 650.00 549.00 3,400.00 10,000.00

Fee Analysis Total Cost (Small Issue) 7,991.55 10,550.00 1,585.06 5,911.00 24,715.00 9,470.00 4,832.69 11,752.45 16,157.00

Fee Analysis Total Cost (Large Issue) 11,394.94 81,100.00 1,585.06 9,961.00 162,265.00 78,316.00 27,332.69 108,752.45 44,593.00

Fee Analysis Direct Costs to a Natural Person of

Trading Government Bonds 227,147.00 113,681.30 43,675.97 65,520.00 140,500.00 389,900.00 128,820.00 17,125.00 51,600.00

Fee Analysis Direct Costs to a Legal Person of



139

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Trading Corporate Bonds 227,147.00 113,681.30 43,675.97 65,520.00 140,500.00 389,900.00 128,820.00 17,125.00 51,600.00



Fee Analysis Indirect Costs to a Natural Person of

Trading Government Bonds 1,250.00 1,000.00 12,500.00 5,000.00 2,500.00 2,500.00 500.00 1,000.00 7,500.00

Fee Analysis Indirect Costs to a Legal Person of

Trading Government Bonds 1,250.00 1,000.00 12,500.00 5,000.00 2,500.00 2,500.00 500.00 1,000.00 7,500.00


Trading Corporate Bonds - 12,500.00 12,500.00 5,000.00 6,250.00 - 2,500.00 - 12,500.00


Trading Corporate Bonds - 12,500.00 12,500.00 5,000.00 6,250.00 - 2,500.00 - 12,500.00

Fee Analysis

Settlement and Clearing Costs to a

Natural Person of Trading Government

Bonds

42,750.00 82,500.00 515.34 1,825.00 65,000.00 50,800.00 2,650.00 5,687.50 1,240.00

Fee Analysis


Legal Person of Trading Government

Bonds

42,750.00 82,500.00 515.34 1,825.00 65,000.00 50,800.00 2,650.00 5,687.50 1,240.00

Fee Analysis


Natural Person of Trading Corporate

Bonds

42,750.00 82,500.00 515.34 1,825.00 65,000.00 50,800.00 2,650.00 5,687.50 1,240.00

Fee Analysis


Legal Person of Trading Corporate

Bonds

42,750.00 82,500.00 515.34 1,825.00 65,000.00 50,800.00 2,650.00 5,687.50 1,240.00

Fee Analysis Safekeeping Costs to a Natural Person

of Trading Government Bonds 81,250.00 25,153.39 12,547.04 10,000.00 25,000.00 50,050.00 7,677.59 25,641.66 27,950.00

Fee Analysis Safekeeping Costs to a Legal Person of



of Trading Corporate Bonds 81,250.00 25,153.39 12,547.04 10,000.00 25,000.00 50,050.00 7,677.59 25,641.66 27,950.00



Fee Analysis Tax Costs to a Natural Person of

Trading Government Bonds 100,000.00 200,000.00 100,000.00 240,000.00 180,000.00 70,000.00 200,000.00 - -

Fee Analysis Tax Costs to a Legal Person of Trading

Government Bonds 200,000.00 100,000.00 100,000.00 180,000.00 180,000.00 100,000.00 320,000.00 - 210,000.00




Corporate Bonds 200,000.00 200,000.00 100,000.00 180,000.00 180,000.00 200,000.00 320,000.00 300,000.00 210,000.00

Fee Analysis Total Trading Costs to a Natural Person


Fee Analysis Total Trading Costs to a Legal Person of







140

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Trading Government Bonds - - - - - - 50.00 - -


Trading Government Bonds - - - - - - 50.00 - -


Trading Corporate Bonds 1,750.00 1,000.00 375.00 500.00 875.00 3,750.00 1,250.00 150.00 350.00


Trading Corporate Bonds 1,750.00 1,000.00 375.00 500.00 875.00 3,750.00 1,250.00 150.00 350.00

Fee Analysis


Natural Person of Trading Government

Bonds

42,750.00 82,500.00 515.34 1,825.00 65,000.00 50,800.00 2,650.00 5,687.50 1,240.00

Fee Analysis


Legal Person of Trading Government

Bonds

42,750.00 82,500.00 515.34 1,825.00 65,000.00 50,800.00 2,650.00 5,687.50 1,240.00

Fee Analysis


Natural Person of Trading Corporate

Bonds

42,750.00 82,500.00 515.34 1,825.00 65,000.00 50,800.00 2,650.00 5,687.50 1,240.00

Fee Analysis


Legal Person of Trading Corporate

Bonds

42,750.00 82,500.00 515.34 1,825.00 65,000.00 50,800.00 2,650.00 5,687.50 1,240.00










Trading Government Bonds 100,000.00 200,000.00 100,000.00 240,000.00 180,000.00 70,000.00 200,000.00 - -


Government Bonds 200,000.00 100,000.00 100,000.00 180,000.00 180,000.00 100,000.00 320,000.00 - 210,000.00




Corporate Bonds 200,000.00 200,000.00 100,000.00 180,000.00 180,000.00 200,000.00 320,000.00 300,000.00 210,000.00






141

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142

Appendix 2 – Bond Market Analysis Scoring Framework

Tier 1 Tier 2 Tier 3 Tier 4 Boolean Max

Indicator Measurement Criteria Range Score Range Score Range Score Range Score Yes No

COST EFFECTIVENESS

Auction Fees 8

Electronic Auction Processing System Cost in € per annum €15,001 < 1 € 5,001 € 15,000 2 € 2,001 € 5,000 3 € 0 €2,000 4 4

Fees for the submission of bids Cost per bid in € €21 < 1 € 11 € 20 2 € 6 € 10 3 € 0 € 5 4 4

Corporate Bond Issuance Fees 36

Prospectus Approval Fee (Small Issue) Cost per issue in € € 5,001 €10,000 1 € 1,001 € 5,000 2 € 501 € 1,000 3 € 0 € 500 4 4

Prospectus Approval Fee Large Issue) Cost per issue in € €10,000 €50,000 1 € 2,001 € 10,000 2 € 1,001 € 2,000 3 € 0 €1,000 4 4

Prospectus Approval Fee Cap Yes / No 1 0 1

Stock Exchange Listing Fee (Small Issue) Cost per listing in € € 2,001 < 1 € 1,001 € 2,000 2 € 501 € 1,000 3 € 0 € 500 4 4

Stock Exchange Listing Fee (Large Issue) Cost per listing in € € 5,001 €10,000 1 € 2,001 € 5,000 2 € 1,001 € 2,000 3 € 0 €1,000 4 4

Stock Exchange Listing Fee Cap Yes / No 1 0 1

Stock Exchange Maintenance Fee (Small

Issue) Cost in € per annum € 2,001 € 5,000 1 € 1,001 € 2,000 2 € 501 € 1,000 3 € 0 € 500 4 4

Stock Exchange Maintenance Fee

(Large Issue) Cost in € per annum € 5,001 €10,000 1 € 2,001 € 5,000 2 € 1,001 € 2,000 3 € 0 €1,000 4 4

Stock Exchange Maintenance Fee Cap Yes / No 1 0 1

CSD Issuance Fee (Small Issue) Cost per issue in € € 2,001 € 5,000 1 € 1,001 € 2,000 2 € 501 € 1,000 3 € 0 € 500 4 4

CSD Issuance Fee (Large Issue) Cost per issue in € € 5,001 €10,000 1 € 2,001 € 5,000 2 € 1,001 € 2,000 3 € 0 €1,000 4 4

CSD Issuance Fee Cap Yes / No 1 0 1

Trading 36

Direct Costs 20

Stock Exchange Trading System Access Cost in € per annum €15,001 < 1 € 5,001 € 15,000 2 € 2,001 € 5,000 3 € 0 €2,000 4 4

Alternative Trading System (ATS) Access Cost in € per annum €15,001 < 1 € 5,001 € 15,000 2 € 2,001 € 5,000 3 €1 €2,000 4 4

Stock Exchange Trading Fees Cost per trade in € € 151 < 1 € 101 € 150 2 € 51 € 100 3 €0 € 50 4 4

ATS Trading Fees Cost per trade in € € 151 < 1 € 101 € 150 2 € 51 € 100 3 €1 € 50 4 4

Brokerage Fees Cost per trade in € € 2,001 < 1 € 1,001 € 2,000 2 € 501 € 1,000 3 €0 € 500 4 4

Indirect Costs 16

Bid Offer Spreads (Government) -

Publicly traded

Avg Spread in bps (on-the-run

2,5,10yr bonds) 251 < 1 101 250 2 51 100 3 0 50 4 4

Bid Offer Spreads (Government) - OTC Avg Spread in bps (on-the-run

2,5,10yr bonds) 251 < 1 101 250 2 51 100 3 0 50 4 4

Bid Offer Spreads (Corporate) - Publicly

traded

Avg Spread in bps (on-the-run

2,5,10yr bonds) 251 < 1 101 250 2 51 100 3 0 50 4 4

Bid Offer Spreads (Corporate) - OTC Avg Spread in bps (on-the-run

2,5,10yr bonds) 251 < 1 101 250 2 51 100 3 0 50 4 4


143

Settlement & Safekeeping 18

Settlement & Clearing 9

CSD clearing & settlement transaction

fees Cost per trade in € € 21 < 1 € 11 € 20 2 € 6 € 10 3 €0 € 5 4 4

CSD clearing & settlement transaction

fee cap Yes / No 1 0 1

Custodian Settlement Fees Cost per trade in € € 50 < 1 € 26 € 50 2 € 11 € 25 3 €0 € 10 4 4

Safekeeping 9

CSD Safekeeping fees Cost for portfolio in € per annum € 2,501 < 1 € 1,251 € 2,500 2 € 1,250 € 751 3 €0 € 750 4 4

CSD Safekeeping fee cap Yes / No 1 0 1

Custodian Safekeeping Fees Cost for portfolio in € per annum € 50,001 < 1 € 25,001 € 50,000 2 €12,501 €25,000 3 €0 € 12,500 4 4

Taxation 48

Transaction taxes 16

Purchase of Government Bonds

(Individual) Cost per trade in € € 21,000 < 1 € 11,000 € 20,000 2 € 1 € 10,000 3 € 0 € 0 4 4

Purchase of Government Bonds

(Corporate) Cost per trade in € € 21,001 < 1 € 11,000 € 20,000 2 € 1 € 10,000 3 € 0 € 0 4 4

Purchase of Corporate Bonds

(Individual) Cost per trade in € € 21,001 < 1 € 11,000 € 20,000 2 € 1 € 10,000 3 € 0 € 0 4 4

Purchase of Corporate Bonds

(Corporate) Cost per trade in € € 21,001 < 1 € 11,000 € 20,000 2 € 1 € 10,000 3 € 0 € 0 4 4

Withholding taxes 16

Coupon / Interest on Government

Bonds (Individual)

Cost in € based on annual

portfolio coupon income

€

200,001 < 1 €150,001 €200,000 2 €100,001 €150,000 3 € 0 €100,000 4 4

Coupon / Interest on Government

Bonds (Corporate)



€

200,001 < 1 €150,001 €200,000 2 €100,001 €150,000 3 € 0 €100,000 4 4

Coupon / Interest on Corporate Bonds

(Individual)



€

200,001 < 1 €150,001 €200,000 2 €100,001 €150,000 3 € 0 €100,000 4 4

Coupon / Interest on Corporate Bonds

(Corporate)


portfolio coupon income €200,001 < 1 €150,001 €200,000 2 €100,001 €150,000 3 € 0 €100,000 4 4

Disposition / Sales taxes 16

Capital gain on Government Bonds

(Individual)

Cost of annual profit on trades in

€ €200,001 < 1 €150,001 €200,000 2 €100,001 €150,000 3 € 0 €100,000 4 4

Capital gain on Government Bonds

(Corporate)


€ €200,001 < 1 €150,001 €200,000 2 €100,001 €150,000 3 € 0 €100,000 4 4

Capital gain on Corporate Bonds

(Individual)


€ €200,001 < 1 €150,001 €200,000 2 €100,001 €150,000 3 € 0 €100,000 4 4

Capital gain on Corporate Bonds

(Corporate)


€ €200,001 < 1 €150,001 €200,000 2 €100,001 €150,000 3 € 0 €100,000 4 4

Total 146


144

Tier 1 Tier 2 Tier 3 Tier 4 Boolean Max

Indicator Measurement Criteria Range Score Range Score Range Score Range Score Yes No

ISSUANCE EFFICIENCY

Auction Efficiency 16

Notification Time Number of days 0 7 1 8 14 2 15 30 3 30 < 4 4

Bidding Time Number of days 10 < 1 7 10 2 4 6 3 0 3 4 4

Award Time Number of days 10 < 1 7 10 2 4 6 3 0 3 4 4

Auction Frequency Days (i.e. weekly, monthly,

quarterly, etc.) 95 < 1 36 95 2 15 35 3 0 14 4 4

Corporate Bond Issuance Efficiency 20

Shelf Registrations Allowed Yes / No 4 0 4

Prospectus Approval Time in Days 31 < 1 15 30 2 8 14 3 0 7 4 4

Credit Rating Time in Days 31 < 1 15 30 2 8 14 3 0 7 4 4

Listing Time in Days 31 < 1 15 30 2 8 14 3 0 7 4 4

Other Processes Time in Days 31 < 1 15 30 2 8 14 3 0 7 4 4

Total 36


145

Appendix 3 – Bond Market Analysis Scores

Raw Scores

Cost Effectiveness

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

rbia

Slo

va

k R

ep

ub

lic

Ma

x

Auction Fees 7 8 4 5 4 8 8 8 5 8

Electronic Auction Processing System 3 4 3 1 3 4 4 4 1 4

Fees for the submission of bids 4 4 1 4 1 4 4 4 4 4

Corporate Bond Issuance Fees 27 21 31 21 13 23 27 21 14 36

Prospectus Approval Fee (Small Issue) 2 1 4 3 0 1 2 1 3 4

Prospectus Approval Fee Large Issue) 2 0 4 4 0 0 1 0 4 4

Prospectus Approval Fee Cap 1 0 0 0 0 0 1 0 1 1

Stock Exchange Listing Fee (Small Issue) 4 4 4 1 4 4 3 3 1 4

Stock Exchange Listing Fee (Large Issue) 4 4 4 1 4 3 4 1 1 4

Stock Exchange Listing Fee Cap 1 1 0 1 0 1 0 1 1 1

Stock Exchange Maintenance Fee (Small Issue) 2 1 3 1 0 3 3 4 0 4

Stock Exchange Maintenance Fee (Large Issue) 2 2 4 2 0 4 4 2 1 4

Stock Exchange Maintenance Fee Cap 1 1 0 1 0 0 0 1 0 1

CSD Issuance Fee (Small Issue) 3 3 3 3 2 3 4 4 1 4

CSD Issuance Fee (Large Issue) 4 4 4 4 3 3 4 4 0 4

CSD Issuance Fee Cap 1 0 1 0 0 1 1 0 1 1

Trading 21 22 25 20 18 21 31 29 17 36

Direct Costs 5 6 17 8 5 5 15 13 9 20


146

Stock Exchange Trading System Access 3 3 4 4 2 3 4 4 4 4

Alternative Trading System Access 0 0 3 0 0 0 4 1 1 4

Stock Exchange Trading Fees 1 1 3 1 1 1 3 4 1 4

ATS Trading Fees 0 0 4 0 0 0 3 0 0 4

Brokerage Fees 1 2 3 3 2 1 1 4 3 4

Indirect Costs 16 16 8 12 13 16 16 16 8 16

Bid Offer Spreads (Government) - Publicly traded 4 4 2 3 3 4 4 4 2 4

Bid Offer Spreads (Government) - OTC 4 4 2 3 4 4 4 4 2 4

Bid Offer Spreads (Corporate) - Publicly traded 4 4 2 3 2 4 4 4 2 4

Bid Offer Spreads (Corporate) - OTC 4 4 2 3 4 4 4 4 2 4

Settlement & Safekeeping 7 9 16 13 9 11 14 12 13 18

Settlement & Clearing 4 2 8 6 2 4 5 4 6 9

CSD clearing & settlement transaction fees 1 1 4 2 1 1 1 2 3 4

CSD clearing & settlement transaction fee cap 0 0 0 1 0 0 1 1 0 1

Custodian Settlement Fees 3 1 4 3 1 3 3 1 3 4

Safekeeping 3 7 8 7 7 7 9 8 7 9

CSD Safekeeping fees 1 4 4 2 4 4 4 4 4 4

CSD Safekeeping fee cap 1 0 0 1 0 1 1 1 1 1

Custodian Safekeeping Fees 1 3 4 4 3 2 4 3 2 4

Taxation 48 48 48 40 48 48 42 44 40 48

Transaction taxes 16 16 16 16 16 16 16 16 16 16

Purchase of Government Bonds (Individual) 4 4 4 4 4 4 4 4 4 4

Purchase of Government Bonds (Corporate) 4 4 4 4 4 4 4 4 4 4

Purchase of Corporate Bonds (Individual) 4 4 4 4 4 4 4 4 4 4

Purchase of Corporate Bonds (Corporate) 4 4 4 4 4 4 4 4 4 4

Withholding taxes 16 16 16 14 16 16 14 14 14 16

Coupon / Interest on Government Bonds (Individual) 4 4 4 3 4 4 4 4 4 4

Coupon / Interest on Government Bonds (Corporate) 4 4 4 4 4 4 4 4 4 4

Coupon / Interest on Corporate Bonds (Individual) 4 4 4 3 4 4 4 3 2 4

Coupon / Interest on Corporate Bonds (Corporate) 4 4 4 4 4 4 2 3 4 4

Disposition / Sales taxes 16 16 16 10 16 16 12 14 10 16

Capital gain on Government Bonds (Individual) 4 4 4 3 4 4 4 4 4 4

Capital gain on Government Bonds (Corporate) 4 4 4 2 4 4 2 4 1 4

Capital gain on Corporate Bonds (Individual) 4 4 4 3 4 4 4 3 4 4

Capital gain on Corporate Bonds (Corporate) 4 4 4 2 4 4 2 3 1 4

Cost Effectiveness Score 110 108 124 99 92 111 122 114 89 146


147

Issuance Efficiency Analysis

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

rbia

Slo

va

k R

ep

ub

lic

Ma

x

Auction Timeline 12 12 14 12 14 13 14 12 13 16

Notification Time 2 2 2 1 2 1 2 1 2 4

Bidding Time 4 4 4 4 4 4 4 4 4 4

Award Time 4 4 4 4 4 4 4 4 4 4

Auction Frequency 2 2 4 3 4 4 4 3 3 4

Corporate Bond Issuance Timeline 13 14 16 13 14 11 10 9 13 20

Shelf Registrations Allowed 0 0 0 0 0 0 0 0 0 4

Prospectus Approval 2 2 4 1 3 1 2 1 3 4

Credit Rating 4 4 4 4 4 4 4 4 4 4

Listing 3 4 4 4 3 2 2 2 2 4

Other Processes 4 4 4 4 4 4 2 2 4 4

Issuance Efficiency Total 25 26 30 25 28 24 24 21 26 30


148

Weighted Scores

Cost Effectiveness

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

rbia

Slo

va

k R

ep

ub

lic

We

igh

ts

Auction Fees 13 15 8 9 8 15 15 15 9 15

Corporate Bond Issuance Fees 30 23 34 23 14 26 30 23 16 40

Trading 9 9 10 8 8 9 13 12 7 15

Settlement & Safekeeping 6 8 13 11 8 9 12 10 11 15

Tax 15 15 15 13 15 15 13 14 13 15

Cost Effectiveness 73 70 81 64 52 73 83 74 55 100

Rank 5 6 2 7 9 4 1 3 8

Issuance Efficiency

Fe

de

rati

on

of

Bo

snia

an

d

He

rze

go

vin

a (

B&

H)

Re

pu

bli

ka

Srp

ska

(B

&H

)

Bu

lga

ria

Cro

ati

a

Mo

nte

ne

gro

No

rth

Ma

ced

on

ia

Ro

ma

nia

Se

rbia

Slo

va

k R

ep

ub

lic

We

igh

ts

Auction Timeline 23 23 26 23 26 24 26 23 24 30

Corporate Bond Issuance Timeline 46 49 56 46 49 39 35 32 46 70

Issuance Efficiency Total 68 72 82 68 75 63 61 54 70 100

Rank 5 3 1 5 2 7 8 9 4

Appendix 3 – Table of Figures

Figure 1: Government Bond Yield Curves ........................................................................................................... 15

Figure 2: Corporate Bond Yield Curves ............................................................................................................... 16

Figure 3: Stock Exchange Listing Requirements ................................................................................................ 17

Figure 4: Listed Bonds Outstanding (€mn) ......................................................................................................... 18

Figure 5: Listed Government Bonds Outstanding by Issuance Currency (€mn) ........................................ 18

Figure 6: Listed Corporate Bonds Outstanding by Issuance Currency (€mn) ............................................ 19

Figure 7: Bonds Traded on the Stock Exchange in 2018 (€mn) ..................................................................... 19

Figure 8: Government Bonds Traded on the Stock Exchange in 2018 by Issuance Currency (€mn) ... 20

Figure 9: Corporate Bonds Traded on the Stock Exchange in 2018 by Issuance Currency (€mn) ........ 21

Figure 10: Auction Type Matrix .............................................................................................................................. 22

Figure 11: Auction Scheduling Type Matrix ........................................................................................................ 22

Figure 12: Total Number Days to Conduct and Auction (Chart and Data Table) ....................................... 23

Figure 13: Auction Processing System Cost Chart ............................................................................................ 24

Figure 14: Auction Processing System Matrix .................................................................................................... 24

Figure 15: Corporate Bond Issuance Requirements Matrix ........................................................................... 25

Figure 16: Average Number of Days to Issue a Corporate Bond (Chart and Matrix) ................................ 26

Figure 17: Total Corporate Bond issuance Fees - Chart and Table (€) ......................................................... 27

Figure 18: Small Corporate Bond Issuance Cost Breakdown – Chart and Table (€) ................................. 28

Figure 19: Large Corporate Bond Issuance Cost (€) ......................................................................................... 28

Figure 20: Trading Systems Availability Matrix ................................................................................................... 30

Figure 21: Trading Systems Cost – Chart and Table (€) ................................................................................... 30

Figure 22: Publicly Traded Government Bond Spreads – Chart and Table (bps) ...................................... 31

Figure 23: Publicly Traded Corporate Bond Spreads - Chart and Table (bps)............................................ 32

Figure 24: OTC Government Bond Spreads – Chart and Table (bps) ........................................................... 32

Figure 25: OTC Corporate Bond Spreads (bps) ................................................................................................. 33

Figure 26: Direct Trading Fee Cost Per Transaction – Chart and Table (€).................................................. 34

Figure 27: Settlement Fees Per Transaction – Chart and Table (€) ............................................................... 36

Figure 28: Safekeeping Fees Per Annum – Chart and Table (€) ..................................................................... 37

Figure 29: Withholding Tax Matrix (%) ................................................................................................................. 39

Figure 30: Taxes on Disposal / Sale Matrix (%)................................................................................................... 40

Figure 31: Cost Effectiveness Rank ....................................................................................................................... 41

Figure 32: Issuance Efficiency Rank ...................................................................................................................... 42

Figure 33: Portfolio Cost to Natural Person – Chart and Table (€) ................................................................ 43

Figure 34: Portfolio Cost to Legal Person (€) ...................................................................................................... 44

Contact Information

Prepared by Investor Connected Limited

Lead Consultant: Thierry Clarke

e: [email protected]

t: +44 207 510 1758

a: 5 Indescon Square

Lightermans Road

London, E14 9DQ

www.investorconnected.com

mailto:[email protected]

http://www.investorconnected.com/