Securities
Subjects:
Listed securities
The following securities are traded on the WSE:equities, bonds, subscription rights, allotment certificates and investment certificates, as well as derivative instruments:futures contracts, index participation units and warrants.
Equities are the basic type of securities quoted on the WSE; they account for a substantial part of Exchange trading.
Quotations are made in a continuous trading system or in a single-price system with two auctions. Additionally, for large blocks of securities, so-called blocktrades outside the public order book are possible. Transactions are executed electronically, via the Exchange computer system. The National Depository for Securities, which settles transactions, also performs operations on securities for example dividend payments, share splits and bond redemptions. Equity transactions are settled in a T+3 cycle, on the third day after the transaction on a delivery versus payment (DVP) basis.
Bonds are traded in the continuous trading system. The majority of bonds listed are Treasury bonds. Corporate bonds were introduced to trading on the Exchange for the first time in 2000. The settlement cycle for bonds is T+2.
Treasury bonds have been listed on the Exchange since 1992. At the end of 2001, there were 51 issues of Treasury bonds and two issues of corporate bonds in trading, including one issued by a foreign bank. All bonds are quoted in the continuous trading system, with one bond as the transaction unit. As far as the interest calculation method is concerned, bonds listed on the Exchange may be divided into three groups:floating interest-rate, fixed interest-rate and zero-coupon bonds.
Two-, three-, five-and ten-year bonds are listed. On the Exchange, both Treasury and corporate bonds are traded.
Floating interest-rate bonds
Three-and ten-year floating interest-rate bonds are quoted on the Exchange.
For owners of three-year bonds, interest is paid out quarterly.
It is calculated based on the average yield of 13-week Treasury bills.
Interest on ten-year bonds is paid out once a year. It is calculated based on the average yield on 52-week Treasury bills. The nominal value of three-year bonds is 100 zloty and for ten-year bonds 1, 000 zloty.
Fixed interest-rate bonds
In 2001, there were three types of these bonds listed:two-, five-and ten-year.
Interest on these bonds, depending on the maturity date, ranges from 6%to 12% annually, and is paid out once a year. The nominal value of one bond is 1, 000 zloty.
Zero-coupon bonds
In the case of these bonds, the holder is not entitled to any payment before the maturity date.
Then, the holder receives an amount equal to the bond's nominal value.
Income from these bonds comes in the form of a sale discount.
In the year 2001, there were seven such issues listed on the Exchange, including one by a foreign entity.
Derivatives
In January 1998, the WSE launched its derivatives market as trading in futures contracts on the WIG20 index began.
At the end of 2001, there were 58 derivatives series in the following categories:
WIG20 Index
The WIG20 index debuted on the 16 April 1994, the WSE's third anniversary.
It is calculated based on a portfolio comprised of shares in the 20 largest and most traded companies on the main market.
The Exchange takes into account two criteria when selecting companies for the index: turnover value and market value.
No more than five companies from any one sector can participate in the index.
The WIG20 is a price index, which means that only price changes for its constituent shares are taken into account in the calculations.
During a trading session, the WIG20 value is calculated every 15 seconds, based on the most recent transaction prices, with an accuracy of +/-0.01 of a point. At the end of trading, the closing value is announced.
The index base date is April 16, 1994; and its base value is 1, 000 points.
Changes in the WIG20 portfolio are made every quarter, based on a ranking of listed companies by their turnover and market values.
In 2005 pension funds entered their seventh year on the market. Approximately 20.8 billion PLN out of 63 billion PLN controlled by pension funds at year-end, was invested in stocks of Exchange-listed companies.
