Q: The Prague Stock Exchange also serves as a facility for energy or electricity trading. What are the other new developments? In which directions do you expect the exchange to develop in the next years?

A: Recently the Securities Commission was incorporated within the structure of the Czech National Bank. Many of the members of the Prague Stock Exchange are banking members, and the idea was that if the Czech National Bank, which regulates the banking sector, also regulates the activities of the capital market, there would be synergy effects from using a common platform for all the data both the capital market and the banking sector.

This step is also important because the people from the Czech National Bank are more business oriented. Last year, when we asked for licensees to trade futures, investment certificates, and structured notes, we were able to receive these licenses in very reasonable time. So among the new developments is the trading of new products, such as futures of indexes and stocks, investment certificates, etc. Then we decided to start the project to trade energy products, and I believe that using market makers is also good for trading energy.

Forward-looking, there is a potential niche for trading exchange traded funds. We are also discussing with several foreign banks the placement of their structured products on the Prague Stock Exchange. Currently, we have around 30 structured products and I expect the number to increase to over 100 in a year. I also expect more dual listings, especially from companies with regional operations.

Another big project that we are currently working on is the central depository. We are discussing a change in the structure that will result in an entity which should provide all the services that are now provided by Univyc and the Czech National Bank. The rationale behind the change is to lower the risk and to benefit from the synergy of centralizing the whole operation. The result should be more streamlined operations, a lower cost of the services and, ultimately, greater liquidity.

We are also working on a complete backup of the trading system, which will allow us to move the trading to a different place in a few minutes. I believe that it is very important for investors to have confidence in case of disasters. The project is complex because it means almost operating two stock exchange systems simultaneously.

Q: What is your view on the global mergers and alliances that take place? Do you see them as an opportunity or a threat?

A: When we were discussing a purchase of a trading system six or eight years ago, other exchanges such as the Budapest Stock Exchange were also considering new trading systems. I think that it was a great opportunity to build a common platform that would facilitate the access for investors to our markets.

That didn’t happen for several reasons, mostly the legislation, which was really different at the time. Now, with the common EU standards, there are few differences in terms of listing requirements, pre-trading and post-trading transparency, and legislation.

The second problem, of course, was the difference in terms of languages, cultures, and ownership. For example, the Prague Stock Exchange is an entirely private company, while more than 98% of the Warsaw Stock Exchange is owned by the government. That creates certain difficulties in finding a common approach.

But the Prague Stock Exchange is looking for expansion and globalization. We officially announced our interest in the privatization of the Bulgarian Stock Exchange after the government decided to sell a 44% stake. So we definitely see the globalization as an opportunity that will facilitate growth through synergy.