Bulgaria’s Shift to the Euro: Key Information for Our Clients

Dear clients, we would like to inform you about the applicable rules for the currency conversion to euros and provide necessary information regarding the impact of the euro introduction on the activities and services offered by investment intermediaries.

Date of Introduction
The Law for the Introduction of the Euro in the Republic of Bulgaria (Published in the State Gazette, Issue 70, dated August 20, 2024) will come into effect on the date determined by the Decision of the European Council (EU Council) regarding Bulgaria’s adoption of the euro.
The date for introducing the euro as the official currency of Bulgaria will be determined in this decision and will be announced by the Investment Intermediaries.

Currency Conversion and Rounding Rules
Currency conversion from Bulgarian leva to euros will be performed using a fixed exchange rate of 1.95583 leva per 1 euro, which must be confirmed by the EU Council by amending Regulation (EU) No. 2866/98.
The conversion will divide the amount in leva by the full numerical value of the official exchange rate (expressed to six decimal places). After conversion, the resulting amount will be rounded to two decimal places, rounding the third decimal according to standard rounding rules.

Example: 100,000 leva divided by 1.95583 results in 51,129.188. Since the third decimal is greater than five, the converted amount is 51,129.19 euros.

Existing Contracts
The introduction of the euro will not alter or cancel existing contracts. All contracts, including those for trading in financial instruments in leva or referencing the Bulgarian lev, will continue to be valid after Bulgaria joins the eurozone.

Automatic Currency Conversion of Dematerialized Financial Instruments
On the date the euro is introduced, the market operator “Bulgarian Stock Exchange” AD and the organizer of the multilateral trading system “Capman” will automatically convert the market value of dematerialized financial instruments from leva to euros. The Central Depository AD will also automatically convert the nominal value of dematerialized financial instruments from leva to euros.

Existing Government Bonds
From the date of the euro’s introduction in Bulgaria, the nominal value of all government bonds in leva will be converted from leva to euros by the Bulgarian National Bank, following the same conversion and rounding rules.

Settlement of Financial Instrument Transactions
Transactions in financial instruments, concluded in leva before the introduction of the euro and settled on or after the euro’s introduction, will be settled in euros.

No Fees for Currency Conversion
No fees or commissions will be charged for currency conversion.

Automatic Conversion for Collective Investment Schemes
For collective investment schemes, investment funds, and alternative investment funds in euro, the requirement for automatic conversion of the nominal value of units does not apply.

Conversion Rules for Various Financial Instruments

• The nominal value of a share will be converted from leva to euros following the same rules for exchange rate application and rounding.

• The total nominal value of debt securities (other than government securities) will also be converted as per the stated rules.

Period of Dual Denomination
The period for dual denomination in leva and euro begins one month after the decision for the introduction of the euro comes into force and ends 12 months after the euro’s introduction. During this period, investment intermediaries will indicate amounts in both currencies.

Period of Dual Circulation
For one month after the introduction of the euro, leva banknotes and coins remain legal tender in Bulgaria. Investment intermediaries and managing companies will accept both leva and euros for transactions, returning the change exclusively in euros, provided they have sufficient funds.

Suspension of Transactions with Non-Cash Financial Instruments
Transactions with non-cash financial instruments will be suspended for three business days before the introduction of the euro. The suspension does not apply to transactions with instruments registered and traded outside Bulgaria. Transactions with registered Bulgarian instruments will resume on the first business day after the introduction of the euro.

Right to Information
From the date of introduction to one year thereafter, each client has the right to request information regarding monetary values in connection with the investment services provided. Investment intermediaries will provide this information for free within 7 days of the request. Clients may request this information by phone, email, or in person at the intermediary’s office.

This announcement is available in Bulgarian at the following link: Information Regarding Currency Conversion to Euro (BG)