Key drivers for development

The key drivers which may impact the Group’s development dynamics include:

External drivers

Macroeconomic situation in Poland and worldwide

According to the Eurostat forecasts,(1) Poland’s GDP growth will be 1.8% in 2013 (average forecast for EU is -0.3%), and 2.6% in 2014 (average forecast for EU is 1.6%). The above-average dynamics of Polish economy growth creates favourable conditions both for price increases of shares listed on WSE and for increased interest in securities listed on WSE on the part of domestic and international investors. WSE growth is also determined by the global economic situation and the conditions on foreign financial markets, which may impact the perception of the Polish economy and financial market by foreign investors.

Changes in infrastructure, laws and regulations

OTC derivatives clearing by KDPW_CCP

Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (“EMIR”) imposes the obligation of clearing specific classes of OTC (over-the-counter) derivatives in special entities: CCP clearing houses, as well as the obligation to report derivatives trade to trade repositories. The obligations will formally take effect in the coming quarters of 2013. Under these provisions, the National Depository for Securities, an associate of WSE, opened a trade repository on November 2, 2012 while KDPW_CCP, a subsidiary of KDPW, provides OTC derivatives clearing services as of January 2, 2013. In connection with the entry to the new market and the clearing of a new range of transactions, the clearing house KDPW_CCP raised its capital from PLN 100 to 200 million, which ensures safe risk management including the new segment of interbank market. The comprehensive introduction of the new services required amendments to the Polish legislation to allow the clearing house KDPW_CCP to perform the functions of central counterparty (CCP). New provisions of the Act on Trading in Financial Instruments effective as of August 4, 2012 introduced for the first time novation in clearing to the Polish legal system.[2] Consequently, the activity of the KDPW Group, which previously only focused on the capital market, now includes an offer for the banking sector, which should help to diversify the sources of revenue.

Pension funds

In May 2011, the Act Amending Certain Acts Relating to the Operation of the Social Security System took effect. The provisions of the Act which are key from the perspective of WSE include:

  • reduction of the contributions transferred to OFE (open-ended pension funds) from 7.3% of the gross pay to 2.3 % as of May 2011 and gradual increase of the contribution up to 3.5% in 2017. The contributions transferred to open-ended pension funds are 2.8% in 2013;
  • gradual increase in the cap for investments in stock from 40% of the total assets as at the end of April 2011 (42.5% as of May 2011) up to 90 % in 2034 (in 2011-2014, the cap will increase by 2.5 p.p. and subsequently by 2.0 p.p. per annum). The limit is 47.5% in 2013.

Current regulations in Poland also impose a cap on investment of open-ended pension funds in financial instruments listed on foreign exchanges and not listed on WSE to 5% of their total assets. The decision of the European Court of Justice based on a complaint of the European Commission against Poland will entail a change of the limits on foreign investment of open-ended pension funds. The legislative process aiming to amend the regulations governing the investment policy of institutional investors is underway.


The State Treasury at the end of 2012 held significant stakes of shares in many listed companies (e.g. 35.2% in PZU, 33.4% in PKO BP, 61.9% in PGE, or 31.8% in KGHM). The share of the State Treasury in the capitalization of companies listed on WSE was 20.7% at the end of 2012. WSE is an effective platform for privatization of large companies controlled by the State Treasury. It is expected that, in the nearest years, the State Treasury will be still privatizing through WSE, both by reducing the stake of the State Treasury in companies already listed and by privatizing new companies.

Support for the production of electricity from cogeneration and the “exchange obligation” for gas

The activity of PolPX is largely impacted by national provisions of the Energy Law and its implementing regulations. The Energy Law is currently being amended. The parameters which will be defined for the system supporting production of electricity from high efficiency cogeneration will determine the volumes of trading and the volumes of cancelled and issued certificates of origin of energy from cogeneration in the Register of Certificates of Origin. In particular, the protracted legislative work concerning support for production of energy from cogeneration may result in very low or non-existent volumes of trading and volumes of cancelled and issued certificates of origin of such energy (since the current regulations in this area will expire at the end of March 2013). The draft new Gas Act will impact the volumes of trading on the gas exchange. Introduction of the obligation to sell a specific proportion of gas on the exchange and allowing gas producers, distributors and sellers to be eligible as participants of the exchange may contribute to a significant increase in the volume of natural gas traded on PolPX.

Internal drivers

Level of fees

WSE operates in a competitive environment. The competitiveness of exchange fees and the standing of Polish capital market entities and the Exchange as a public company are the determinants of WSE’s fee policy.

Implementation of the new trading system

Competitiveness of stock exchanges largely depends on the level of technology involved: efficiency, capacity and speed of the trading system and infrastructure. The Exchange is at the final stage of implementing a new trading system, which is planned to go live on April 15, 2013. Following the implementation, the trading system will offer trading speed and scalability superior to the legacy system, offering a much broader range of functionalities. In the Company’s view, this will contribute to an increase in trading volumes and a broader range of financial instruments and may attract new investor and broker groups to WSE. In the Exchange’s view, following the implementation of the new trading system parallel to the development of the security clearing infrastructure, the attractiveness of WSE as a trading platform will increase for investors, issuers and brokers.

Short selling

In 2010, WSE introduced new regulations with a view to facilitate short selling. The Company expects that the development of short selling and related securities lending will allow investors to use a broader range of investment strategies including arbitration, thus making a positive impact on trading in derivative instruments and the market of single-stock futures and options, and enable the introduction of single-stock option to trading. Short selling should also improve liquidity of trading on the cash market and make prices more effective.

At 2012 year-end, short selling was allowed on WSE members’ own account or on the clients’ account in respect of shares of 30 companies and 36 bonds listed on WSE (33 shares and 38 bonds at 2011 year-end). Market makers could enter into short sale transactions in respect of shares of 140 companies and 36 bonds (140 shares and 38 bonds at 2011 year-end). The share of short selling in total turnover in shares on the Main Market was 1.5% in 2012 (1.1% in 2011, 0.1% in July-December 2010). WSE will take more initiatives in order to make short selling more accessible and to stimulate investor activity in this area.

(1) European Commission’s European Economic Forecast – Autumn 2012
(2)Novation in clearing allows the clearing house KDPW_CCP to take over the rights and obligations of the original counterparties to transactions executed both on organized markets, such as the WSE Main Market, Catalyst, NewConnect, BondSpot, and over-the-counter (OTC) as soon as the transaction is accepted for clearing.

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