let’s talk about non-banking financial market

ACADEMIC LABORATORY

Let’s talk about non-banking financial market

JULY 2016

Cuprins

01. Financial Supervisory Authority

02. Non-banking financial markets in 2015

03. Consumers’ Protection

Financial Supervisory AuthorityLet’s talk about non-banking financial market

01

Let’s talk about non-banking financial marketFinancial Supervisory Authority

ensuring the stability, competitiveness and proper operation of the financialinstruments markets, promoting the trust in these markets and in theinvestments in financial instruments, and ensuring the protection of operatorsand investors against disloyal, abusive and fraudulent practices;

promoting the stability of the insurance activity and protecting the rights ofpolicyholders;

ensuring the efficient operation of the private pension system and protectingthe interests of the participants and beneficiaries.

FSA contributes to the consolidation of an integrated operation and supervisory framework of the non-banking market, of the participants of and operations performed on such markets and aims at:

Romanian competent authority within the meaning of Art. 11 of Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation, as subsequently amended and supplemented.

Pentru atingerea obiectivelor sale legale, ASF și-a construit arhitectura instituțională pentru a asigura:

Authorizing and Regulation of participants on the non-banking financial markets in Romania

Supervision for non-banking financial markets in Romania

Non-banking financial services Consumers’ protection


What have we done in 2015?

Financial stability and trust in the

playfield

Alignment to EU legislation

and strengthening

legislative framework

Re-credibilization for FSA and EU

institutional positioning

Consumers protection


Main actions in 2015

2015: Insurance

Year

BSR & BSRE Auditing exercise

for insurance companies

Surveillance had intensified and

financial redressing measures were

taken

A complete and modern legislative

pack was elaborated

Important reforms on

capital market

Clarifying the situation of

RASDAQ market

Reforming the legislative and

implementing some EU legislation

Removing some obstacles in

functioning of the market

Improve regulation for

private pensions market

Modifying the primary legislation

Relaxing the investment policy

Optimization for the risk and

provisioning frame

Finalizing FSA’ institutional

reform

Major changes in the FSA’ flowchart and institutional

governance

New wages policy

Financial Studies Institute


Improving consumers’ trust

Increasing development and maturity of markets:- Stimulate the development of capital

market (S.T.E.A.M.)- Stimulate the development of

insurance market - Stimulate long term savings in private

pensions funds (LIFE)

Ensuring an appropriate, prudent and sustainable regulatory framework

Strengthening the efficiency of supervision

Upgrading instruments of FSA’ intervention

Strengthening FSA’ institutional capacity

FSA participation in European integration based on shared values

What is next?


Non-banking financial markets in 2015Let’s talk about non-banking financial market

02


72.75% 70.18% 67.88% 64.11% 60.81% 57.34%

9.35% 9.28% 10.05% 10.78% 11.74% 11.88%

0%

20%

40%

60%

80%

2010 2011 2012 2013 2014 2015

Financial sector assets vs GDP

Capital market

Private pensionsInsurance

2010 2011 2012 2013 2014 2015*Banking market 72,75% 70,18% 67,88% 64,11% 60,81% 57,34%Non-banking financial market 9,35% 9,28% 10,05% 10,78% 11,74% 11,88%

Investment Funds 5,33% 5,01% 5,16% 5,62% 5,92% 5,89%Private pensions Funds 0,87% 1,21% 1,72% 2,31% 3,03% 3,24%Insurance companies 3,15% 3,06% 3,18% 2,85% 2,80% 2,75%

Financial market in GDP 82,10% 79,46% 77,93% 74,89% 72,55% 69,22%* Assets reported for June 2015

* Assets reported for June 2015 and eliminated the duplicated data

Investment funds

Insurance

Represents approx. 29% of the banking and non-banking

financial assets

Listed companies

Private pensions

% Total financial Assets 2015*Banking market 71,05%Non-banking financial market 28,95%

Investment Funds with no Romanian shares’ investments 6,41%

Private pension Funds with no Romanian shares’ investments 3,31%

Insurance companies with no Romanian shares’ investments 3,39%

Stock exchange capitalization for local companies 15,84%

What is our role in financing the economy?


Insurance market

35 insurance companies out of which 20 general insurance (AG), 8 life insurance (AV) and 7 composit activity

Gross written premiums worth 8,75 mld. lei, increasing with 8,2% as 2014 (7,6% growth for AG, 10,8% growth for AV)

Top 3 market share gross written premium (PBS): Allianz-Țiriac, Omniasig, Groupama (Ʃ 32,41% of total)

Distribution of PBS-AG: 44,10% of total in Bucharest, 10,51% in North-West region and for PBS-AV: 83,53% in Bucharest, 3,28% North-West region

More at: http://www.asfromania.ro

Evolution of gross written premiums


Capital market

Trades on Bucharest Stock Exchange (BVB)

On BVB the shares are preffered at trading (89,97% of total trading value).

Mai multe date: http://www.asfromania.ro


Total assets of investment funds

Private pensions’ market

Pillar II – new entry participants Sept.2014 - Sept.2015 Pillar II Investment portfolio structure (total, mld.lei)

Pillar III – new entry participants Pillar III Investment portfolio structure (total, mil.lei)

More at: http://www.asfrom

ania.roNon-banking financial markets in 2015Let’s talk about non-banking financial market

Consumers’ ProtectionLet’s talk about non-banking financial market

03


Who are the consumers?

6.459.626 participants in Pillar II and 373.437 participants in

Pillar III

319.510 investitors in open-end funds and 91.610 closed

-end funds investors

13.512.725 insurance contracts, of which 10.176.751 general insurance contracts and 3.335.974 life insurance contracts

date la sfârșitul lunii septembrie 2015

And 8.466.635 shareholders

Why is important to have insurance, to make investments or to have a private pension?

Helps at limiting the financial losses when they occur

Helps an individual/family to be prepared for an unexpected event, to raise the incomes or to have a quiet life after retirement

Plays an important role in most of the financial planning

In Romania, according to an international study, only 1 out of 5 Romanians have knowledge about the financial market and only 15% save and invest to have money at

elderness.


Age Childhood Teenage Adult Retirement

Eventsin life

GamesWhishes

WhishesStudies

Fun

FamilyHouseJobs

Holidays

RetirementNephews

Unexpected events in life include losing the job, accidents, illness

- - - - - - - - Common elements – importance of financial planning - - - - - - - -

- Incomes - - Expenses - - Risk - - Responsabilities - - Whishes -

Get informed!


Consumers’ Protection Directorate

Monitoring, proactive - irregular practices, fraudulent, inaccurate, unauthorized,misconduct, misleading advertising, innovative products etc.

Financial Education, proactive – consumer information, increasing welfare and the level of financial inclusion, awareness and financial literacy for children, millenials, adults.

Management of petitions, reactively – investigating complaints from consumersof financial services, clients of supervised entities

Public relations – assistance for consumers, regaining trust, transparency ofprocesses


Access to financial services

and financial capabilities

Financial education

Financial literacy

Consumers’ protection


Priorities for consumers’ protection:

• Monitoring rules of conduct that can affect customers and the market or that break the law

• Protecting investors against incorrect or abusive, fraudulent practices• Reviewing contracts as standing for consumers’ protection• Implementing standars for business conduct:

– Mandatory transparency rules – Objective recommandations and high quality assistance for clients – Avoiding conflict of interests– Ethics in relations with the consumers– Duty of care as improving responsability of financial entities towards c

onsumers • Ensuring non-discriminatory treatment and access to goods and services

which comply consumers’ needs• Reducing financial educational defficit• Access to education, based on needs, and building financial capabilities • Prompt administration of petitions received and facilitating their submission• Sustaining protecting funds – Investors Compensation Fund, Insurance Guarantee

Fund, Private Pensions Guarantee Fund, Street Victims Fund.


ASF Financial Education Program

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