The FINANCIAL — The Polish capital market is focused on modern depository settlement and clearing infrastructure, managed by the Central Securities Depository of Poland (KDPW) and the KDPW_CCP Clearing House.
“After joining the European Union and after implementing all the regulations on the level of the Polish capital market we want to be a hub for the regional capital markets,” Iwona Sroka, President and CEO of KDPW and KDPW_CCP, told The FINANCIAL. “That is why stock exchange as a capital market attracts foreign investors and issuers. We would like to be very friendly and attract new investment firms as market participants. I mean the members in the clearing house and also market participants for our services provided by KDPW Group which is the security depository,” she added.
Today, KDPW Group plays a leading role as far as changes in the region are concerned, offering services which are not available on the other CEE markets, according to Sroka.
“We have new offers for the region which is a trade repository. We have another new offer as a numbering agency, which are the LEI (legal entity identifier) numbers which in the near future will be the most popular numbers. All those steps are because of the last European and global crisis from 2008 and the regulators as well as markets, they put great attention on the safety, on the safe clearing, because it is a part of the stability of the financial system. We can now offer a unique catalogue of post trading services as a post trading infrastructure in Poland having that trade repository, having that LEI numbering agency and authorize on the level of the European Union clearing house. It means that we can easily offer our services across the countries in the European Union. Thinking about the countries in the region which are not a part of the European Union, we can still be a kind of window to international issuers, or investors or financial firms,” said Sroka.
“The new offers are innovative. We have an in house IT system which is very flexible and that is because we can adapt our solutions to the requirements of the market participants and to the trading venues as well as the stock exchange and also the confirmation platform. We use a SPAN system for risk management in the clearing house,” she said.
Q. WSE is open to countries which are not EU members. How do you help the companies from non EU member countries to pass the strict stages necessary to getting listed at WSE?
A. If you want to be authorized you have to implement those strict and very tough regulations and parameters. We help such countries to avoid those barriers, for example how to register a company in another country and other legal issues. There is still a possible way to be a market participant when you are abroad.
Q. Could you please discuss how Poland and especially Warsaw are seen as an attractive destination for other countries in the region and how the Polish market leads over other European and global markets?
A. In regard to the transportation, the possibility of accommodation, or setting up an investment firm in Poland – all of this is good and safe here. Poland is a real “safe haven” in the region for many reasons. There is no corruption here and GDP growth is at a pretty nice and high level I would say. Gross domestic product exceeded EUR 382 bln and became the largest economy in Central and Eastern Europe and the eighth largest measured by GDP in the European Union.
Poland can develop organically. When you build a kind of economy of scale this is also interesting for foreign investors and foreign issuers. They made their choice for markets which are dynamic. They do not only have international investors because when you have two higher level of international investors in comparison to local ones – pension funds, investment funds and individuals – it is dangerous because in times of crisis this is the first group of investors to take their money and leave. That is why a pretty good proportion of local and foreign investors are also a positive for the market.
Poland has become a leader in the region. For several years the Stock Exchange in Warsaw has been responsible for about 60 percent of equity trading in the region. So, the majority of the trading on equities in the region belongs to Warsaw. Warsaw is named fifth market in identifying the markets of the future.
The region is small, we have different currencies, different national banks, and still different regulations concerning securities. There is a harmonization because of the European Union, but there are some barriers at the same time. Poland is the biggest country in this part of Europe and we do not have any big failings or problems. So if you are interested in the region Poland is the best place to come to.
We also want to attract companies from the region, because if you would like to do business in Poland and you are from other countries from the region this is the best means of promotion, to be listed on the local stock exchange. Your clients, your customers then have better visibility of the company. For example there is a very famous company from Bulgaria called Sopharma, a pharmaceutical company; we have some banks from the region and companies from the production sector, which is good!
Q. As far as I know, WSE is going to increase competition with the EU stock exchanges. What is your aim and how are you going to compete with other markets?
A. We will have to compete! Because of that harmonization, because on the regulatory level every country will have almost the same conditions. There are some initiatives that the future will bring the responsibilities of the local infrastructure to the one Pan-European platform. The European Central Bank has an initiative to move the settlement in Europe to a common platform by 2017-2018. Now we are just monitoring this initiative, because mostly our settlement is trades in Polish Zloties. That is why it is not worth that money to connect in a platform that we have just 2 percent transactions settled in Euros. But of course we would like to be ready for the date when our government will announce that we will go with Euro as a currency to be ready to easily join the system. So there are some problems we will face in the future. But being prepared and thinking about our own solutions will be maybe a little bit cheaper than from Pan-European or global institutions and also having the capital loyalty of our local participants is very important for having a safer future.
Q. The WSE is going to be developed as a modern capital market. What does it mean to be “modern”?
A. To have a modern capital market means to have modern infrastructure and technologies. The full range of services that WSE offers should be modern in comparison to other countries. Having a pretty good country and offering complementary services in the field of trading and post trading as well is a simple way to become a modern market. This is modern – to have everything on the local market and offer all range of services.
But when thinking about being a hub of the region there is another issue. We have to develop a friendly environment for foreign investors; to develop new offices to rent and to let; we have to invest in infrastructure – not only trading and post trading infrastructure but I am talking about highways, railways, hotels, the places where people work and spend their time.
Q. What are the achievements of Poland that other markets including Georgia can pattern themselves on and draw inspiration from?
A. Good regulations on the market are the strongest base. The second thing is to educate the population. When you earn money, put some amount aside for investment – so that you can create something for your country and for you as well as get a profit. And the third thing is to create very safe and reliable infrastructure – if you invest your money it is your choice where you invest, but the infrastructure must be absolutely safe.
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