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Prague Stock Exchange in Brief

Prague Stock Exchange in Brief

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Prague Stock Exchange in Brief

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  1. Prague Stock Exchange in Brief

  2. PRAGUE STOCK EXCHANGE • Established in 1993 • Full member of the Federation of the EuropeanSecurities Exchanges • The U.S. SEC officially granted the statusof a"designated offshore securities market“ to the Prague Stock Exchange • Correspondent of the World Federationof Exchanges • Market capitalization 2008: EUR 41bn* • Trade value - shares 2008: EUR 34bn** • PX group operates regulated, free unregulated, derivative and commodity market • Share of 99,5% on the Czech capital market • Leader in the CEE Region * Domestic and foreign issues together ** All PSE’s numbers are “single counted” – each transaction is in the volume only once, not as a buy + sell. Some Exchanges still publish “double counted” number. • Market capitalization and trade value - shares (EURm): ■ Market capitalization – domestic issues ■ Market capitalization – foreign issues ■ Trade value – domestic issues ■ Trade value – foreign issues INTRODUCTION

  3. PRAGUE STOCK EXCHANGE PRAGUE STOCK EXCHANGE – PSE The organiser of the securities market CLEARING AND SETTLEMENT - UNIVYC Clearing and settlement of trades in securities and electricity PRAGUE ENERGY EXCHANGE – PXE The organiser of the electricity market CENTRAL COUNTERPARTY – CCP Counterparty to every trading participant in concluding trades in electricity CENTRAL CLEARING COUNTERPARTY – CCC Counterparty to every trading participant in concluding trades in electricity in Slovakia PX GROUP


  5. PRAGUE STOCK EXCHANGE • Harmonisation of legislation related to market regulation within the EU makes the Czech capital market comprehensible and attractive to all investors used to the EU environment • A big advantage in the Czech Republic is the unsaturated demand of investors seeking possibilities to appreciate their free capital on the stock market • Based on experience from abroad, it is expected high activity of pension funds on the Czech capital market after the prepared pension reform comes into force • The group of small domestic investors is becoming more important, is showing the most dynamic growth and the potential for growth is in hundreds of percent • Due to the fact that the capital market in the Czech Republic is still a relatively new phenomenon, the interest in IPO‘s and other similar events is strong across all types of media • The stability of the Czech economy has been confirmed by the results of 2007 - the growth of GDP in real terms reached 6,5% which means the fastest increase ever in the Czech history * • The productivity of labour as well as the employment rate rose in 2007 and has reached its maximum since the last 11 years * • The GDP per capita in current prices amounted to EUR 13 thousand in 2007 which means a 100% increase since the year 2000 * * Source: Czech Statistical Office CZECH MARKET

  6. PRAGUE STOCK EXCHANGE • European Indices – Annual Changes in 2008 • PX Index –Overall Development OMXSt -38,8% FTSE 100 -31,3 % WIG20 -51,1% DAX -40,4% PX -52,7% SAX -42,0% Euronext 100 -45,2 % SMI -34,8% ATX -61,2% BUX -53,3% BET -70,5% S&P/MIB -49,5% SOFIX -79,7% IBEX 35 -39,4% • PX Index • The official blue chip price index of share issues at the Prague Stock Exchange • Updated 4 times a year, the frequency of the calculation is 15 seconds • Further information on current index composition etc.→ExchangeIndices EXCHANGE INDICES

  7. PRAGUE STOCK EXCHANGE • Privately held joint stock company operating on membership principle • Major shareholder is the Vienna Stock Exchange • Property relation of the sock exchanges in • Prague(Czech Republic) • Vienna (Austria) • Budapest (Hungary) • Ljubljana (Slovenia) • Trading is realized through licensed securities dealers who are members of the Exchange at the same time • Currently 21 experienced members: SHAREHOLDERS AND MEMBERS

  8. SPAD - Quote driven trading module with market makers The purchase and sale prices are continually quoted by the market makers Trading with blue chips Vast majority of blue chips has more than 1 market maker (5 to 10) High liquidity - PSE has one of the highest turnover velocity among the CEE markets Low volatility - experienced market makers are crucial Trading in lots Attracting and keeping liquidity in case of dual listings Automatic Trades (Auction and Continual Regime) - Order driven trading module Auction regime does not require trading in lots The continual regime enables conclusion of transactions based on continually sent buy and sell orders for investment instruments - price and time priority apply to accepted orders PRAGUE STOCK EXCHANGE • Trading is based on automated processing of instructions, meaning that PSE is an electronic exchange • An advantage of the Prague Stock Exchange is its own business platform • the possibility to perform operational updates of the system provides the PSE with great flexibility in the development and implementation of new products and the ability to respond quickly to new market trends and requirements TRADING MODULES

  9. The Exchange members enter their purchase and sale orders into the PSE automatic trading system - matched trades are handed over to UNIVYC, a subsidiary of PSE, for settlement The settlement of trades concluded in the SPAD system is irrevocable and is guaranteed by the Exchange Guarantee Fund, the standard settlement deadline is T+3 Automatic trades are settled as delivery versus payment on the day S = T+3 Block trades are settled on the day chosen by the participating members PRAGUE STOCK EXCHANGE • Transfer of money and delivery of securities are realised by the same date as the “delivery versus payment “ (DVP) - however, the settlement of trades may also occur without the realisation of cash settlement, and is often denoted as “delivery free of payment” (DFP) • UNIVYC has been performing the settlement of exchange trades as well as OTC transactions with investment instruments for fifteen years • The value of settled UNIVYC securities exchange trades and OTC transactions for 2007 reached a record-breaking value of EUR 5,035 billion, representing 99.79% of all settled trades and transfers on the Czech capital market • UNIVYC also provides clearing of trades concluded at Prague Energy Exchange (PXE) CLEARING AND SETTLEMENT

  10. PRAGUE STOCK EXCHANGE • PXE, the Prague Energy Exchange is a new business platform for trading with electricity in the Czech Republic, founded by PSE • PXE‘s aim is to develop a liquid and transparent market that is founded upon an appropriate structure of trading rules and conditions that will ensure fair pricing for electricity • The PXE enables both spot and derivatives trading through its own electronic trading platform • On the derivatives market, it is possible to buy day, month, quarter and year contracts • At all hours of all days, so-called Base Load • Only from Monday to Friday (excl. non-business days) between 8 a.m. and 8 p.m., so-called Peak Load • The spot market enables trade in hour contracts • OTC clearing - PXE provides its participants with registration, settlement and scheduling of OTC trades placed on behalf of a broker or between the Exchange participants • The counterparty to all exchange participants during settlement, registration of delivery and consumption is the Central Counterparty • PXE hybrid trading system - Order driven trading module with market makers • Transparency - thanks to the order driven system • Liquidity - thanks to market makers • Anonymity - the buyer does not know the identity of the seller and vice versa PRAGUE ENERGY EXCHANGE

  11. PRAGUE STOCK EXCHANGE • The Exchange Guarantee Fund • It is a special fund established to provide for the settlement of accounts payable by the UNIVYC members and for the covering of risks arising from the exchange guaranteed trades, it consists of 3 funds: • Guarantee Fund for automatic trades • Guarantee Fund for SPAD • Fund for Derivatives Trades • Inspection Activities • Thanks to high standard monitoring tools, a quality and continuous surveillance is provided • The basis for Exchange control activity is parallel analytical monitoring based on daily monitoring and the analysis of stock exchange trading system data • The monitoring efficiency is enhanced by simple and transparent formal procedures • In addition to daily monitoring and analysis, in-depth inspections are carried out - its focus is aimed primarily at controlling the principles of dealing with a client, trading on credit, information obligations and documentation etc. SAFETY

  12. PRAGUE STOCK EXCHANGE • Harmonisation of legislation related to market regulation within the EU makes the Czech market comprehensible and attractive to all investors used to the EU environment • The disclosure (information) obligation is standard and common for both domestic and foreign issuers - the language to be used to fulfil this obligation is Czech or English • There is no listing fee for an issuer of equities on PSE • Broker has an incentive scheme of 1 year fee holidays for new issues where they act as a IPO manager • No annual fee for issuers on the free market • As a result overall pricing of IPO’s costs are quite favourable on the Czech market • Euroclear, Clearstream and DTCC links working • No additional paperwork regarding dual listings - the so-called passportisation is sufficient (no need to undergo the entire process of having the prospectus approved by the domestic regulator) • Ability to perform so-called conditional trading (no need to wait for the securities themselves to be issued) APPROACH

  13. PRAGUE STOCK EXCHANGE • Number of retail investors is growing constantly from 5,000 in 2004 up to 50,000 in 2008 • Monthly trade value of equity trading by retail investors has grown over last year to recent CZK 20bn ( EUR 833m) • Above mentioned figures shows that „retail“ investors at PSE are rather „high net worth individuals“ as the volume per investor is significantly higher than on some neighbouring exchanges • There is number of fast growing online brokers • Members are offering margin trading • The latest IPOs have shown a great investment appetite of the retail – in the case of NWR, significant portion of the issue was placed among domestic retail POWERFUL RETAIL

  14. PRAGUE STOCK EXCHANGE • ČEZ “Each and every day, dozens, perhaps hundreds, of the best analytical minds of the planet examine whether the decisions of ČEZ Group are the best.” • KOMERČNÍ BANKA “Placing securities on the bourse provides a company with important feedback. Reports from analysts containing an assessment not only of the situation of companies but that of the entire market as well as future development forecasts are a valuable source of information. These reports then help the company to better assess the market situation and expected development. They thus become one of the instruments used to monitor the long-term position on the market or prepare the business plan or budget.” • ERSTE BANK “After deciding to exclude the shares of Česká spořitelna from trading on the Prague bourse, Erste Bank strived to commence the public trading of shares on the Prague market. In this way, it wanted to provide investors with an alternate bank name and to address an even wider group of investors.” • ZENTIVA “The successful entrance on the Prague and London stock exchanges in June 2004 was certainly an important milestone for Zentiva. We are pleased by the interest shown by domestic and foreign investors in our potential for future growth.” • ORCO GROUP “Already in the first few weeks, the Prague bourse was bringing up to 40% of the total volume of investment, which a remarkably high figure. We were also able to significantly expand the investor base.” WHAT ARE THE VIEWS OF SELECTED ISSUERS

  15. PRAGUE STOCK EXCHANGE • CME “Listing on the Prague bourse has already fulfilled our expectations: CME shares are available to investors in the regions where we are active. In this way, we have been able to present CME to investors who are interested in this region and created an opportunity for future cooperation. We believe that other companies focusing on the region of Central and Eastern Europe who want to participate in its development should take the same step.” • PEGAS NONWOVENS “By entering the Prague and Warsaw stock exchanges, Pegas Nonwovens acquired greater transparency and credibility among its customers, suppliers, and other business and technical partners. Investors are interested in our company’s story, which makes it possible for us to turn to the market in the future to finance further growth.” • VIENNA INSURANCE GROUP “For the second listing, we also considered other stock exchanges in Central and Eastern Europe. The decisive argument for the bourse in Prague was, however, the strong position of Kooperativa of Vienna Insurance Group on the Czech insurance market. Another impulse was the fact that VIG is the only insurance company listed on the Prague bourse. VIG wanted to reflect its strong participation on the market in the Czech Republic.” • NWR “If a corporation achieves a certain degree of size and prosperity, it is natural that it will offer its equity shares to investors and will place them on public markets. We have chosen a combination of three European stock exchanges – we are registered in Prague because our activity originated in the Czech market and we simply belong here. In London, the demand of specialised investors oriented on the mining sector is concentrated. We have also registered our equity shares in Poland, which is the second most important destination after the Czech Republic for our company as concerns further development. The owners of the successful Czech companies should act similarly – it will be beneficial not only to them and their companies but also to the capital market and, ultimately, to the entire economy.” WHAT ARE THE VIEWS OF SELECTED ISSUERS

  16. PRAGUE STOCK EXCHANGE • Broadcasting of a new TV programme called „Studio Burza“ right from PSE‘s headquarters has been launched in co-operation with the public Czech TV on January 22nd, 2008 • News from capital markets three times a day • on ČT24 channel or via Internet on the Czech TV web pages • PSE endeavours to develop Czech capital market and supports discussions relating to capital market • PSE has been the main sponsor of the European Conference of the FinancialManagementAssociation International (FMA) held in June 2008 • Corporate responsibility • in March 2007, PSE became a partner of the newly established Unicorn College, which specializes in information and communication technologies and management - PSE bears all the school-fees for the 50 best students • PSE supports children‘s homes located far from big cities and out of sponsors‘ concern • PSE sponsored the Best Company 2007 Award, whose aim is to enhance the prestige of small and middle business that isa important pillar of every healthy economy • Dissemination of Exchange information • A continuous and free stream of information on trading with a 15-minute delay on PSE web page • Final results of trading, i.e. the official price list every day and selected statistical data available for free • Professional users may receive Exchange data in real time (online) or the trade results when the trading day has ended (offline) PUBLIC RELATIONS