The Bulgarian Stock Exchange–Sofia (BSE) was officially licensed by the State Securities and Exchange Commission to operate as a stock exchange on 9 October 1997, and is currently the only functioning stock exchange in Bulgaria. The 1999 Public Offering of Securities Act (POSA) regulates issuance of securities, transactions, stock exchanges, and investment intermediaries.

The first index of BSE-Sofia is SOFIX, the calculation of which began on 20 October 2000. SOFIX represents a correlation of the sum of the market capitalization of the companies within the index portfolio on a given day and the sum of the market capitalization of the same companies on the previous day. SOFIX is the most successful index calculated by BSE-Sofia and is the primary basis for pricing structured products.

BG 40 is based on the issues of shares of the Top 40 companies graded by the number of transactions executed in the last six months. The calculation of BG 40 started on 01 February 2005.

The Bulgarian Stock Exchange guarantees its members and their clients equal access to the Bulgarian trading system. Trading can be carried out either on the BSE floor, or on a remote basis. The trading system is electronic and order-driven. A modified version of the RTS system (NASDAQ based) was implemented in 2000. It offers all the participants full transparency regarding price information and guarantees fail-free execution of orders. In March 2003, Client Order-Book Online System (COBOS) was introduced to allow clients and stock exchange members to place trading orders securely over the Internet in real-time.

The infrastructure of the stock exchange has been substantially improved. Numerous trading instruments, such as government bonds, corporate bonds, Bulgarian depositary receipts, privatization through the stock exchange, and municipal and mortgage-backed bonds, have been introduced. A new set of rules was adopted in 2006, which created a new subdivision of the official and unofficial markets already in existence. The three segments of the official market (A, B, and C) were reduced to two (A and B). A newly proposed registration market is in the works; it will be designed to accommodate the needs of companies that do not meet the markets’ minimum capital and liquidity requirements.

In 2007, BSE—Sofia achieved the best performance in the entire history of Bulgaria’s capital market. The BGN’s 9.946 billion turnover was three times the turnover registered in 2006. Many reasons underpinned the improved interest, but the general cause was optimism related to Bulgaria’s accession to the EU and the increased inflow of foreign investments. Reducing the corporate tax rate from 15% to 10% was another strong incentive for companies to improve their performance.

In 2007, 12 companies had IPOs on the Bulgarian Sock Exchange, including First Investment Bank (with EUR 90 million raised) and Corporate Commercial Bank (with EUR 30 million raised). The average carrying cost of IPOs in 2007, expressed in percent of the total amount of capital raised, were as little as 1.7% — much than those of Central and Western Europe. This means that capital is rising through BSE—Sofia—which is especially attractive to potential issuers and is a prerequisite for listing local and foreign companies.

Two new indexes were introduced in 2007—the non-weighted price index (BG TR30) and the free-float adjusted market capitalization index (BG REIT).

New trading system XETRA was introduced on 21 November 2008, as a part of the main strategy for attracting more foreign and local investors.

Despite recent negative developments, it is expected that the Bulgarian Stock Exchange’s ability to raise new corporate finance will only increase.