24.01.2022

The Ministry of Finance has started a project for Diagnostic of the state of development of the Bulgarian capital market. In recent years, the development of capital markets is a key priority both at European level as well as at national level, because in order to achieve a fully integrated capital market in the European Union, national markets must also evolve.

The objectives of the project are to assess the current status of the Bulgarian capital market, to identify the barriers and impediments for further development, to benchmark the Bulgarian capital markets in comparison with selected EU jurisdictions and to provide recommendations to address the identified barriers.

The assessment of the current status of the Bulgarian capital market and the recommendations will be discussed with the key stakeholders and after the completion of the project will serve as a basis for the development of a Capital Market Development Strategy.

The project is expected to last 18 months and will be carried out with funding by the European Union under the Structural Reform Support Programme and in cooperation with the European Commission's Directorate General for Structural Reform Support, DG REFORM, implemented by the European Bank for Reconstruction and Development.

The second project is for the adoption of a “Legal and Regulatory Framework for Enforceability of Hedging Instruments” (Close-Out Netting for Derivatives and Repo)

Bulgaria is the only EU Member State that has not adopted comprehensive legislation providing for the enforceability of close-out netting in the context of master agreements for transactions in derivatives and securities financing transactions which causes legal uncertainty for derivative transactions and securities financial transactions and hinders their use.

The technical support that will be provided under this project will comprise:

• Analysis of the existing conditions (legal and commercial) for the validity and enforceability of hedging instruments;
• Drafting of a concept report with recommendations on legal and regulatory changes that are required to establish a legal and regulatory framework for close-out netting, which is adequate to the present-day needs of the financial sector, and which is expected to be in the form of a new primary law and/or amendments to the existing financial services and bankruptcy legislation;
• Discussions with key stakeholders, public and private, on the risks and benefits of the proposed Close-out Netting Legal Framework;
• Drafting a bill for the Close-out Netting;
• General guidance on the scope of relevant secondary legislation necessary to further assist the practical implementation of the Close-out Netting Legal Framework;
• Promoting the new Close-out Netting Legal Framework at targeted workshops and/or educational events with the participation of relevant stakeholders.

The project shall be completed within 12 months and is carried out with funding by the European Union via the Structural Reform Support Programme and in cooperation with the European Commission's Directorate General for Structural Reform Support, DG REFORM. The project will be implemented by the European Bank for Reconstruction and Development.