Three new laws governing the capital markets, designed to bring regulations in Poland into line with the rest of the European Union, have been approved by the Polish Parliament, and will become effective on 24 October.
The Law on Trading in Financial Instruments abolishes the monopoly enjoyed by the Warsaw Stock Exchange. OTC trading will now be possible. Local observers expect ATSs to develop, as well as informal trading between firms and individuals.
The lengthily titled Law on the Conditions for Organising Public Offerings, Admission of Securities or Other Financial Instruments to Trading on the Regulated Market and on Public Companies brings Poland into line with the IPO rules laid down in the European Union Prospectus Directive. In a law focused largely on the technicalities and documentation requirements of organising an IPO, the most important change is that Polish issuers will be free to list securities on any other exchange in the European Union. Likewise, foreign issuers can list in Warsaw without hindrance, provided a European regulator has approved the issuance.
The Law on Capital Market Supervision enlarges the powers of the Polish Securities and Exchange Commission (SEC). The SEC can now, for example, suspend the trading accounts of investors that infringe its rules and regulations.
The bills come into force on 24 October 2005 – exactly 30 days after their official publication – and will replace the existing Law on Public Trading in Securities.
Krysztof Pekrul, a country specialist at Bank BPH in Warsaw, says that some regulatory changes requested by local market participants – notably the introduction of nominee accounts – were not included in the changes, and are now unlikely to be implemented before next year. “Despite that fact, the new regulations will help to improve the effectiveness and transparency of the Polish capital markets,” says Pekrul.