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Remarks by Ludwik Sobolewski, President of the Warsaw Stock Exchange

I think the chapter in the history of the Warsaw Stock Exchange as a small, yet very efficient and well-regulated local market has already ended. We are now facing a different challenge: the question of how the main stock exchange in Central Europe should look. And the Warsaw floor is already mature enough to play this role.
We have closed the year 2007 with a record number of debuts – 105, of which around one fifth were companies listed on the NewConnect market, our youngest venture. At the start of 2008 a total of 350 companies are listed in Warsaw. This number is expected to exceed 400 by the end of 2008 and 500 by the end of 2009. Is this number large or small? It depends on the frame of reference. Compared with such giants as the London Stock Exchange or the Frankfurt Stock Exchange, the number of WSE-listed companies is not impressive. But in terms of growth, the Warsaw floor outpaces exchanges elsewhere in the world. Warsaw has become a very important centre of equity trading in Central and Eastern Europe. The value of all domestic companies listed on the Warsaw floor already stands at around 50% of Poland’s GDP.
For some time now, foreign companies have been increasingly eager to list on the WSE and the number of foreign companies has already reached 23. The year 2007 showed clearly that the WSE is increasingly attractive not only to Polish but also to foreign issuers: 12 foreign companies listed in Warsaw by the end of December. The total value of these foreign offerings exceeded PLN13 billion, of which Immoeast’s offering was worth PLN10.7 billion, a European record on the real estate market.
The programme to strengthen the exchange includes efforts to improve the structure and quality of the market. The WSE has introduced a new segmentation of the regulated market based on very transparent criteria, which are clear to companies and investors, and has launched a new market, NewConnect, intended for innovative small and medium sized start-ups (with equity capital of up to PLN20 million). NewConnect has a status of an organised market but operates outside the regulated market as an alternative trading platform. For the issuer, this means more liberal regulations, easier and cheaper entrance as well as operation on the market. NewConnect has already attracted much interest from companies that do not meet the requirements of the regulated market yet.
Having grown large enough, the WSE has become a very interesting and attractive market for investment funds and pension funds.
The WSE is very interested in the planned privatisation of the Polish power sector. According to the Ministry of the Treasury, the first of the four recently consolidated Polish energy groups will appear on the exchange early this year, and others will follow. The Czech power group CEZ, which is already listed on the WSE, has been well received. We expect the start of privatisation of the first rail companies of the PKP Group. Additionally, the Ministry of the Treasury has said it wants to float many stakes in companies which have already been partly privatised. As a result, on the supply side, individual and institutional investors really have something to wait for.
It is in the interest of the economy as a whole to build a market-friendly regulatory environment: tax regulations which may be translated into measurable economic results and regulations related directly to the stock exchange. The WSE is initiating and seeking the introduction of simpler admission procedures and laws designed to reduce costs involved in raising capital through the WSE to make the Warsaw trading floor more competitive with other exchanges. This concerns not only fees of the Exchange and the National Depository for Securities but the total cost of services preceding a company’s debut on the stock market. We will continue to support solutions which do not create additional public market access barriers. The recent update of the WSE corporate governance principles makes them better suited for investor protection and will result in wider adherence to best practices. In this way, the WSE has direct and indirect influence on Polish business ethics.
Ever since its establishment in 1991, WSE has enjoyed much interest from the media. We devoted a lot of time to help journalists develop financial skills in providing stock market news. Under a programme aimed to expand the availability of news about the Polish market, the WSE will be pursuing an active marketing policy to promote the Exchange and the capital market infrastructure in Poland. The WSE will be building its new image and strenghtening its reputation in the business and investor community, both at home and in neighbouring countries.

Code of Best Practice for WSE Listed Companies
New principles of corporate governance, known as “Code of Best Practice for WSE Listed Companies,” became effective on January 1, 2008. The objective of the “Best Practices” is to enhance the transparency of listed companies, improve communication between companies and investors, and improve the protection of shareholders’ rights including rights related to issues not regulated by law. At the same time, the “Best Practices” are supposed not to put burdens on the listed companies which would not be offset by benefits resulting from market needs. As a result, the “Best Practices” concern only those matters where their application may contribute to a rise in the market value of companies and, consequently, reduce the cost of raising capital.
Best practices, as a collection of rules of corporate governance and principles defining relations between listed companies and their market environment, represent an important instrument enhancing the competitiveness of the market. They also exemplify an innovative approach to stock market problems and enhance the market’s attractiveness internationally. This is important because the Polish stock market has been expanding fast and has been consistently strengthening its position among other European capital markets, especially those in Central and Eastern Europe.
The “Best Practices” are not the first document of this kind in Poland. They continue the tradition of the Polish corporate governance movement, which started with the “Best Practices in Public Companies 2002,” a document drew up by a number of people and institutions associated with the capital market. However, the widespread promotion of the practical application of these rules by listed and unlisted companies was only possible after the Warsaw Stock Exchange started to apply its corporate governance principles.
More information: www.corp-gov.gpw.pl

Supervised market
In Poland, supervision over the capital market is exercised by the Polish Financial Supervision Authority (PFSA). Its responsibilities also include insurance supervision, pension scheme supervision and complementary supervision over financial conglomerates of which the supervised entities are part. Every company planning to be listed on the stock exchange has to contact the PFSA first. Whether or not the company is admitted to public trading depends on whether the PFSA approves or rejects its prospectus.
The objective of financial market supervision is to ensure the proper functioning of this market, its stability, security and transparency, confidence in the market and the protection of interests of market participants.

WSE on the Internet
www.wse.com.pl – official website of the Warsaw Stock Exchange (WSE). Communiques and resolutions of the WSE Management Board and Council are published on this website on a current basis. The website also contains quotations published with a 15-minute delay, statistics, information on listed companies, WSE's organisation and operation details, regulations etc.
www.newconnect.pl – official website of the NewConnect market. It contains information on quotations, listed companies, Authorised Advisers, market statistics etc.
www.WSEInfoSpace.pl – on-line service for Polish and foreign investors run jointly by WSE and the Polish Press Agency. The portal contains information about domestic and foreign companies listed on the WSE, their market and macro-economic environment.
www.corp-gov.gpw.pl – on-line service fully devoted to issues related to the corporate governance of WSE-listed companies;
www.wseinternational.eu – special on-line service on foreign companies listed on the WSE. The portal is supposed to help investors learn more about the foreign companies listed on the Warsaw trading floor. It is intended for domestic and foreign investors, both individual and professional.