REGULATION OF SECURITIES MARKETS - …Polish Securities an d Exchange Commission the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan
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Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
REGULATION OF SECURITIES MARKETS
- EVOLUTION OF POLISH CAPITAL MARKET
Miroslaw KachniewskiSecretary of Polish Securities and Exchange Commission
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
1. IOSCO Principles
2. Essential elements of capital markets
3. The case of the Polish market
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
1. IOSCO Principles
Three objectives of securities regulation
Principles Relating to the Regulator
Principles for Issuers
Principles for Collective Investment Schemes
Principles for Market Intermediaries
Principles for the Secondary Market
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Three objectives of securities regulation
the protection of investors
ensuring that markets are fair, efficient and transparent
the reduction of systemic risk
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Principles Relating to the Regulator
comprehensive inspection, investigation, surveillance and enforcement powersoperationally independent and accountable in the exercise of its functions and powersadequate powers, proper resources and the capacity to perform regulator’s functions and exercise its powersthe staff of the regulat or - the highest professional standards including appropriate standards of confidentiality
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Principles for Issuers
full, timely and accurate disclosure of financial results and other information that is material to investors’ decisions
holders of securities in a company -treated in a fair and equitable manner
accounting and auditing standards - high and internationally acceptable quality
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Principles for Collective Investment Schemes
the regulator sets standards for a collective investment scheme the regulator provides ru les governing the legal form and structure of collective investment schemes and the segregation and protection of client assetsthe regulator should ensure that there is a proper and disclosed basis for asset valuation and the pricing and the redemption of units in a collective investment scheme
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Principles for Market Intermediaries
minimum entry standards
initial and ongoing capital
procedures for dealing with the
failure of a market intermediary
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Principles for the Secondary Market
the establishment of tradi ng systems including securities exchanges and systems for clearing and settlement of securities transactions - subject to regulatory authoriz ation and oversight
ongoing regulatory supervision of exchanges and trading systems
transparency of trading
regulation - designed to detect and deter manipulation and other unfair trading practices
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
2. Essential elements of capital markets
Features that attract issuers
Features that attract investors
Incentives that should be employed by
exchanges
Incentives that should be employed by
financial intermediaries
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Essential elements of capital markets
Features that attract
issuers:effective and relatively cheap source of capital
publicity
possibility of financing risky business
investors
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Essential elements of capital markets
Features that attract
investors:protection of shareholders’ rightsfair treatment of all shareholdersaccurate disclosure informationgood investors relations
issuersmarket meeting international standards
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Essential elements of capital markets
Incentives that should be employed by
exchanges:
creation of efficient and effective trading system
relatively low transactional costs
safety of conducted transactions
protection against unfair practices
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Essential elements of capital markets
Incentives that should be employed by
financial intermediaries:
high standard and quality of conducted activities
development of mature procedures and mechanisms
safety of conducted transactions
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
3. The case of the polish market
Dormant market
Manipulated market
Speculative market
Mature market
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Evolution of Polish capital market
In the process of growth of Polish capital market four stages of development can be specified:
Dormant market
Manipulated market
Speculative market
Mature market
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Dormant market
the characteristic feature of the dormant market is that investors are not interested in capital market at all
in Poland it began at the end of the year 1990, along with the privatisation by public offerings and lasted till the beginning of 1992 - WIG = 937 (I.1992)
the market did not attract much attention both abroad and at home and number of opened investment accounts was incredible low
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Dormant market
WARSZAWSKI INDEKS GIEŁDOWY
0
100
200
300
400
500
600
700
800
900
1000
wrz-91 paź-91 lis-91 gru-91 sty-92
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Manipulated market
the main feature of this st age of the growth is that decisions of investors are as much significant for the market, as they can not only influence the market prices, but also determinate short-term trend on the market
in Poland it occurred in 1992 - WIG = 1041 (XII.1992)
the size and the depth of the Polish market were not appropriate for the investment potential of investors
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Manipulated market
WARSZAWSKI INDEKS GIEŁDOWY
0
200
400
600
800
1000
1200
wrz-91
paź-91
lis-91 gru-91
sty-92
lut-92
mar-92
kwi-92
maj-92
cze-92
lip-92
sie-92
wrz-92
paź-92
lis-92 gru-92
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Speculative market
the main feature of this stage of the growth is that the market is dominated by speculationin Poland it began in 1993 and lasted t ill the beginning of 1996
II 1993 (WIG = 1083,1) - IV 1994 (WIG = 14 236,9): unnatural growth generated mainly by domestic investorsIV 1994 (WIG = 11 020,3): price slump on WSEIV 1994 - 1996 (WIG = 14 342,8 - XII.1996): recovery of market’s potential
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Speculative market
WARSZAWSKI INDEKS GIEŁDOWY
0
5000
10000
15000
20000
25000
199
1-0
9-24
199
1-1
2-24
199
2-0
3-24
199
2-0
6-24
199
2-0
9-24
199
2-1
2-24
199
3-0
3-24
199
3-0
6-24
199
3-0
9-24
199
3-1
2-24
199
4-0
3-24
199
4-0
6-24
199
4-0
9-24
199
4-1
2-24
199
5-0
3-24
199
5-0
6-24
199
5-0
9-24
199
5-1
2-24
199
6-0
3-24
199
6-0
6-24
199
6-0
9-24
199
6-1
2-24
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Mature market
in 1996 arose symptoms that the market entered into this stage of development and it lasts up to now
its solid legislative and economic foundations are still developed
the "mature market" does not only mean the mature capital market but also m odern stabile free market economy, acting in a transparen t and stabile political structure
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Mature market
WARSZAWSKI INDEKS GIEŁDOWY
0
5000
10000
15000
20000
25000
199
1-0
9-24
199
2-0
3-24
199
2-0
9-24
199
3-0
3-24
199
3-0
9-24
199
4-0
3-24
199
4-0
9-24
199
5-0
3-24
199
5-0
9-24
199
6-0
3-24
199
6-0
9-24
199
7-0
3-24
199
7-0
9-24
199
8-0
3-24
199
8-0
9-24
199
9-0
3-24
199
9-0
9-24
200
0-0
3-24
200
0-0
9-24
200
1-0
3-24
200
1-0
9-24
200
2-0
3-24
200
2-0
9-24
200
3-0
3-24
200
3-0
9-24
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Development of Polish capital market in numbers
WIG index:
900 points in 1991 - 20 820 points in 2003
number of companies in public trading:
12 (1991) - 263 (2003)
market capitalisation of WSE:
104 mln PLN (1991) - 168 bln PLN (2003)
turnover on WSE:
30 mln PLN (1991) - 215,8 bln PLN (2003)
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Development of capital market’s legislation
The first ever act on public trading in sec urities and trust funds was passed in 1991 and amended in 1993
A new law on the public tr ading of securities and a separate act on investment funds was passed in 1997. Several amendments in the following years
The continuous harmonisa tion with the EU legislation (e. g. a new act on investment funds is being prepared in the parliam ent at the moment)
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Warsaw Stock Exchange Index WIG and capitalisation of the WSE
WARSAW STOCK EXCHANGE INDEX WIG
0
5000
10000
15000
20000
25000
09-91
03-92
09-92
03-93
09-93
03-94
09-94
03-95
09-95
03-96
09-96
03-97
09-97
03-98
09-98
03-99
09-99
03-00
09-00
03-01
09-01
03-02
09-02
03-03
09-03
Sou
rce:
PS
EC 98 249 3 206 3 249
4 4168 768
12 414
20 674
29 86931 408
25 48528 802
43 115
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
CAPITALISATION OF THE WARSAW STOCK EXCHANGE [mln USD]
Source: PSEC
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Turnover at the WSE and number of companies listed
28 185
4 657
11 77313 614
18 381
22 71921 079
26 887
58 249
46 049
36 544
55 457
0
10 000
20 000
30 000
40 000
50 000
60 000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
TURNOVER AT THE WARSAW STOCK EXCHANGE [mln USD]
Source: PSEC
916
22
4465
83
143
198
221 225230
216203
0
50
100
150
200
250
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
NUMBER OF COMPANIES LISTED ON THE WSE
Source: PSEC
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Number of investment accounts and number of brokerage houses
I 93
III 9
3
I 94
III 9
4
I 95
III 9
5
I 96
III 9
6
I 97
III 9
7
I 98
III 9
8
I 99
III 9
9
I 00
III 0
0
I 01
III 0
1
I 02
III 0
2
I 03
III 0
3
0
200000
400000
600000
800000
1000000
1200000
1400000
NUMBER OF INVESTMENT ACCOUNTS
Brokerage houses Banks conducting brokerage activities TotalSource: PSEC
NUMBER OF ENTITIES CONDUCTING BROKERAGE ACTIVITIES
12
20 21 21
11
6 5 6
15
31
19
54 5450 49
36
22 22
86
16
303332 32
29
87
35
4043
3638
28
36
42
4847 46
0
10
20
30
40
50
60
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Banks conducting brokerage activities Brokerage houses TotalSource: PSEC
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Number and value of public offers
NUMBER OF PUBLIC OFFERS
54
32
48
90
73
54
62
27 27
86
106
1
16 14
5 41 1 0
44
26
47
74
59
49
58
26
15
29
11
57
0
10
20
30
40
50
60
70
80
90
100
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Total number of offers Number of IPOs Number of stock issues Number of bond issuesSource: PSEC
VALUE OF PUBLIC OFFERS [mil USD]
858
358 49
8
2416
2304
1242
937
713
664
1763
345
239
11
1407
1216
610
53 1 2 0
513
119
487
1009
1088
632 88
4
712
150 37
9512
1384
0
500
1 000
1 500
2 000
2 500
3 000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Total value Value of IPOs Value of stock issues Value of bond issuesSource: PSEC
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Number of investment funds and value of their net assets
1 1 1 1 1 1 2 4 511 10
30
15
46
17
66
21
85
19
108
19
124
17
137
0
20
40
60
80
100
120
140
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Number of investment funds and f unds corporations
Investment funds corporations Investment fundsSource: PSEC
388 584281
474 540 509
626
1 741
3 053
5 857
8 862
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 30.09.2003
Value of net assets of investement funds [mln USD]
Source: PSEC
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Number of pension funds and value of their net assets
21 21 21 21 21 21 2120
18 1817 17 17 17 17
16 16 1616
0
5
10
15
20
25
2Q1999
3Q1999
4Q1999
1Q2000
2Q2000
3Q2000
4Q2000
1Q2001
2Q2001
3Q2001
4Q2001
1Q2002
2Q2002
3Q2002
4 Q2002
1Q2003
2Q2003
3Q2003
4Q2003
Number of pension funds
Source: PSEC
4 204544
1 0061 337
1 642
2 3952 856
3 464 3 643
4 869
5 9496 206
6 625
8 223 8 282
9 693
10 459
11 986
0
2000
4000
6000
8000
10000
12000
2Q1999
3Q1999
4Q1999
1Q2000
2Q2000
3Q2000
4Q2000
1Q2001
2Q2001
3Q2001
4Q2001
1Q2002
2Q2002
3Q2002
4 Q2002
1Q2003
2Q2003
3Q2003
4Q2003
Value of net assets of pension funds [mln USD]
Source: PSEC
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Central Table of Offers Index ITO and capitalisation of the CTO
CENTRAL TABLE OF OFFERS INDEX ITO [points]
0
5000
10000
15000
20000
25000
XII1996
XII1997
VIII1998
XII1998
IV1999
VIII1999
XII1999
IV2000
VIII2000
XII2000
IV2001
VIII2001
XII2001
IV2002
VIII2002
XII2002
IV2003
VIII2003
XII2003
Sou
rce:
PS
EC
41 42
141
109
7058 59
97
0
20
40
60
80
100
120
140
160
1996 1997 1998 1999 2000 2001 2002 2003
CAPITALISATION OF THE CENTRAL TABLE OF OFFERS [mln USD]
Source: PSEC
Polish Securities and Exchange Commission
the Sixth OECD Conference on Financial Sector Development in the Central Asian countries, Azerbaijan and Mongolia, 29-30 April 2004, Istanbul, Turkey
Turnover at the CTO and number of companies listed
16 12
692
203130
77161
2466
0
500
1000
1500
2000
2500
1996 1997 1998 1999 2000 2001 2002 2003
TURNOVER AT THE CENTRAL TABLE OF OFFERS [mln USD] CUMULATED FROM THE BEGINNING OF THE CALENDAR YEAR
Source: PSEC
2
14
2524
21 21 2122
0
5
10
15
20
25
1996 1997 1998 1999 2000 2001 2002 2003
NUMBER OF COMPANIES LISTED ON THE CeTO.
Source: PSEC
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