Key events of 2012

The following key events relevant to the growth of WSE took place in 2012:

WSE issued and introduced to trading on Catalyst series B bonds at PLN 75 million of nominal value

In February 2012, WSE offered 750,000 series B bonds at PLN 75 million of nominal value to individual investors in a public offering. The issue supplemented the December 2011 issue of series A bonds at PLN 170 million of nominal value addressed to qualified investors in a public offering. WSE financed the acquisition of PolPX with the cash raised in the bond issue.

Series A bonds are listed on Catalyst since January 4, 2012 and series B bonds since February 20, 2012.

WSE acquired Polish Power Exchange

In February 2012, WSE acquired in two tranches 80.33% and 7.67% of shares of PolPX, respectively, thus taking over control of PolPX and its subsidiaries. As a result of subsequent transactions with minority shareholders of PolPX, among others in April, July and December 2012, the stake of WSE in PolPX was 100% as at the balance-sheet date of December 31, 2012.

The acquisition of PolPX by WSE was an important step in the growth and consolidation of the market in exchange commodities and financial instruments for which exchange commodities are the underlying.

On December 20, 2012, PolPX opened exchange trading in natural gas. The Commodity Forward Instruments Market offers trade in monthly, quarterly and yearly gas contracts with delivery as of January 1, 2013. The day-ahead (spot) market opened on December 31, 2012. The creation of the gas exchange is an important element of the strategy of the WSE Group.

Stabilization of WSE’s position as a European IPO leader

According to the annual PwC IPO Watch Europe survey, WSE ranked first among all European exchanges by the number of IPOs in 2012. In total, 108 companies(1) were newly listed on the WSE’s stock markets (19 companies on the Main Market, 89 companies on NewConnect). With PLN 3,530 million in the value of IPOs on the stock markets, WSE ranked fifth among all European exchanges in 2012.

6 foreign companies were newly listed in 2012, including 4 companies on the Main Market and 2 companies on NewConnect. The 50th foreign company was newly listed on the WSE’s stock markets in early December. In aggregate, 51 foreign companies were listed at the end of the year, including 43 companies on the Main Market and 8 companies on NewConnect.

The Catalyst market reported significant growth of the main market parameters in 2012. The number of issuers grew to 155 (an increase of 64) and the value of listed issued grew by 30.7% to the record-high level of PLN 52.3 billion.

WSE’s stock markets reported the highest number of IPOs for another consecutive year: in aggregate, there were 105 IPOs on these markets, representing 39.5% of all European IPOs. In terms of the value of IPOs (EUR 739 million), WSE ranked fifth in Europe.(2)

Value of IPOs on regulated and alternative markets in Europe, EUR million (including new issues and sale of existing shares)
  For the year ended December 31, 
EUR million 2012 2011 2010 2009 2008
LSE 9,357 14,607 12,650 1,797 8,884
Deutsche Boerse 2,141 1,523 2,413 53 330
NYSE Euronext 1,038 154 417 1,907 2,501
SIX Swiss Exchange 801 81 163   424
WSE 739 2,212 3,808 1,594 2,502
Luxembourg Stock Exchange 564 451 797 1,575 285
Oslo Børs 291 815 2,445 91 63
NASDAQ OMX 48 292 2,029 66 208
BME 9 6,083 1,562 19 292
Irish Stock Exchange - 17 - - -
Athens Exchange - - - 10 -
Borsa Italiana - - - - 129
CEESEG-Vienna - 366 38 - -
Total: 14,988 26,601 26,322 7,112 15,618
Source: Data aggregated on the basis of the IPO Watch Europe report

 

Number of IPOs on regulated and alternative markets in Europe (including new issues and sale of existing shares)
  For the year ended December 31,
  2012 2011 2010 2009 2008
WSE 105 203 112 38 91
LSE 80 107 123 30 97
Deutsche Boerse 25 18 24 5 12
NYSE Euronext 19 27 32 21 65
NASDAQ OMX 17 30 24 11 26
Luxembourg Stock Exchange 7 20 36 22 19
S BME 5 9 12 3 1
SIX Swiss Exchange 4 2 4 4 6
Oslo Børs 4 13 16 2 13
Athens Exchange - - - 1 -
Irish Stock Exchange - 1 - - 1
CEESEG-Vienna - 2 1    
Borsa Italiana - - - 1 6
Total: 266 432 384 138 337
Source: Data aggregated on the basis of the IPO Watch Europe report

 

According to the World Federation of Exchanges (WFE), in 2012, WSE’s markets jointly ranked second by the increase in the number of listed companies among exchanges associated in WFE (an increase by 90 companies; 11.6%) while the aggregate number of companies on all exchanges decreased by 0.8%.

Development of products and services

In May 2012, WSE and NYSE Technologies, the NYSE Euronext company responsible for technology development and sales, announced a partnership in the distribution of market data. The partnership gives data vendors broader access to services covering WSE market data through a range of NYSE Euronext market data products and services. The partnership is a continuation of the co-operation between WSE and NYSE Euronext established in 2010.

In 2012, the Exchange continued to expand its product offer:

1) Two new classes of single-stock futures, including futures on WSE shares, were introduced to exchange trading in January 2012; another 3 classes of single-stock futures were introduced to trading by the end of the year.

2) Cross orders were introduced in April 2012. Cross orders complement the range of available orders and may contribute to the growth of the trading volume on the Warsaw Stock Exchange. Cross orders are used by Exchange Members to close transactions between clients of an Exchange Member or between an Exchange Member and its clients. They are an intermediate type of order between orders used in session trading and orders used in block trades.

3) WSE changed the standard specification of currency futures (US$, EUR, CHF and GBP) as of May 2012. The change consisted in the reduction of the trading unit (contract size) from 10,000 currency units to 1,000 currency units. The change was aimed to improve the liquidity of currency futures and to further grow trade in these derivatives.

4) 237 structured products were added to the product offer in September, including turbo certificates, trackers, WIG20 warrants, and factor certificates, new on WSE, which offer investment at a fixed leverage in commodities (gold, silver, crude oil, sugar, wheat and maize) and exchange indices (EURO, STOXX50, WIG20 and DAX).

In 2012, WSE started to calculate and publish two new exchange indices:

1) as of May 30, WIG-CEE; it was introduced as a result of the growing number of issuers from the region and as part of the strategy of strengthening WSE’s position in Central and Eastern Europe. After WIG-Poland and WIG-Ukraine, WIG-CEE is the third index calculated by WSE where the main criterion of eligibility is the issuer’s country of origin;

2) as of December 3, WIG20TR; the index portfolio is the same as that of WIG20 but unlike WIG20, which is a price index, WIG20TR is calculated including income from shares (dividends and pre-emptive rights). As a result, WIG20TR should be the best reference point for assessment of investments in large-cap companies.

WSE took measures to ensure superior transparency, safety and credibility of trading on NewConnect. In June 2012, WSE introduced new regulations extending the reporting obligations of companies and the range of penalties for non-compliance. Additional requirements for Authorised Advisers were introduced to encourage broader sharing of knowledge and opinions on the activity of companies with investors; a special reporting obligation was imposed on companies whose activity may raise doubts from the perspective of the safety of trading. A new system of market segmentation was introduced: in addition to the NC Lead segment, new categories of companies at a risk to liquidity were added including: NC High Liquidity Risk (companies whose free float is less than PLN 1 million) and NC Super High Liquidity Risk (shares in the HLR segment where the average share price is less than PLN 0.10 or the volatility is more than 10 percent).

Market situation and investor activity

Despite the downturn on the financial markets prevailing for much of 2012, the main indices closed the year at the highest percentage increase since 2009. The WIG index gained 26.2% during the year while WIG20 gained 20.4%. The WIG20TR index, which includes income from shares, gained 29.6%. The sector indices which gained the most in 2012 were WIG-SUROWCE (+78.9%), WIG-CHEMIA (+57.9%) and WIG-PALIWA (+39.1%). The indices that lost the most were WIG-BUDOWNICTWO (-30.9%), WIG-TELEKOMUNIKACJA (-21.2%) and WIG-ENERGIA (-2.7%). The NewConnect market index, NCIndex, lost 20.1%.

Similar to other global exchanges, the WSE reported a lower value of trading in shares. The average turnover per session on the Main Market was PLN 754 million, down by 24.5% compared to the record-breaking year 2011. On NewConnect, turnover fell by 38.2% to PLN 4.6 million per session.

The main parameters of the Catalyst market improved considerably in 2012. The number of issuers grew to 156 and the value of issues increased by 30.9% to a record-high PLN 52.3 billion. The average turnover per session more than doubled and reached PLN 4.5 million. On the Treasury BondSpot Poland market of Treasury securities, the value of cash transactions increased by 46.7% to PLN 449.6 billion.

At the end of 2012, WSE had 60 members, including 33 local members and 27 remote members. As at the date of preparation of this Report, the Exchange had 34 local members and 24 remote members.

New rates of exchange fees

WSE introduced the following changes to the price list in 2012:

  • as of the beginning of the year, the amount and the mode of charging annual fees to data vendors changed (the rates were increased and fees denominated in EUR were replaced with fees in PLN);
  • as of August, operating fees for block trades in single-stock futures were reduced.

New rates of WSE fees for trading in shares, rights to shares, ETF units and futures contracts apply as of January 1, 2013. The change involves:

  • reduction of the fixed fee for orders in shares, rights to shares and ETF units in session and block trades on both stock markets from PLN 1 to PLN 0.20 and reduction of the same fee for orders executed as part of the functions of a market member to PLN 0.05;
  • change of the fixed fee for index futures from PLN 1.70 to PLN 1.60;
  • introduction of reduced fees for day trading on the futures market in session trading (other than for transactions executed on the account of a market member and transactions executed on own account of an exchange member);
  • introduction of reduced fees for transactions executed on own account of a brokerage house on the futures market.

Changes on the WSE Management Board

The WSE Supervisory Board at its meeting on December 21, 2012 adopted a resolution suspending Ludwik Sobolewski in his function as President of the WSE Management Board for compelling reasons as of December 21, 2012. The WSE Supervisory Board also adopted a resolution appointing Adam Maciejewski, Member of the WSE Management Board, as Deputy President of the WSE Management Board and acting President of the WSE Management Board as of December 21, 2012. Paweł Graniewski, Member of the WSE Supervisory Board, was delegated to temporarily perform functions of a Member of the WSE Management Board from January 10, 2013 for a period not longer than 3 months.

On January 17, 2013, the Extraordinary General Meeting of WSE adopted a resolution dismissing Ludwik Sobolewski, President of the WSE Management Board, from the WSE Management Board. Adam Maciejewski was appointed President of the WSE Management Board. The resolution of the General Meeting appointing Adam Maciejewski and the resolution dismissing Ludwik Sobolewski came into force on February 15, 2013, the date of delivery to WSE of the decision of the Polish Financial Supervision Authority approving the changes on the WSE Management Board.

Adam Maciejewski has worked for the Warsaw Stock Exchange since 1994, among others as Director of the Trading Department and Director of the Trading and Market Development Department. Since June 28, 2006, he was a Member of the WSE Management Board responsible among others for organization of trading, trading systems, technologies, the derivatives market as well as information products. He supervises projects aiming to make the WSE’s new trading system available to Exchange Members, as well as other business and technology projects which are key to the safety of trading and the development of exchange services.

(1) The IPO Watch Europe 2012 report mentions 105 IPOs: the report does not include companies which transferred from NewConnect to the WSE’s Main Market and one company on the Main Market which is dual-listed on the WSE and earlier had an IPO on another exchange covered by the PwC survey.
(2) Source: Annual list in the PwC IPO Watch Europe report which covers national exchanges in Austria, Belgium, Denmark, France, Germany, Greece, Ireland, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the UK. The number and the value of IPOs reported by PwC only include companies first introduced to public trading. They do not include companies which transferred from market to market (e.g., from NewConnect to WSE’s regulated market).

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