EEC 2019

Marek Dietl President of Warsaw Stock Exchange

-     The session supervision module implemented by the Warsaw Stock Exchange has been operating all the time. The module is used to capture market manipulations. By the end of November, the WSE will implement a new, world-class session supervision module. This will be an additional, definitely more advanced tool than the WSE uses today - announced President of Warsaw Stock Exchange Marek Dietl in a conversation with WNP.PL.

- There are still over 2.000 companies in Poland that could be listed. The funds of future pensioners gathered in the ECP (Employee Capital Plans) will attract the best Polish companies to the stock exchange, and the profits of these companies will increase our pensions - he adds.

The WSE is working on a draft strategy for the capital market, which assumes the removal of significant regulatory barriers present on the capital market within six months, and all of them within two years. The stock exchange is waiting for the inflow of capital related to the entry of the ECP.
According to the President of Warsaw Stock Exchange Marek Dietl, the funds of future pensioners gathered in the ECP will attract the best Polish companies to the stock exchange. He claims that there are 2.000 entities that can be listed in Poland.


In your opinion, are we facing a crisis considering the recent turbulence in stock exchanges? Is the WSE prepared for a possible crisis?

Marek Dietl, President of Warsaw Stock Exchange: - In matters related to stock exchange business, a solution to problems is to act in advance. This is what we do by executing our strategy, implementing new ideas that will push the entire market forward.

When it comes to trust in the stock exchange, the level of maturity of a given market is recognized by the way it responds to difficult situations. Trust should be rebuilt, and this can be achieved by creating a strong compliance culture.

Can you specify?

- On October 8, the Warsaw Stock Exchange has adopted a canon, anti-corruption standards that are compatible with international standards, in particular with ISO 37001 ISO 37001 Anti-Bribery Management Systems standard. It can be treated as a pattern of conduct. The implementation of these principles will significantly reduce the probability of such questionable legal situations.

The session supervision module implemented by the Warsaw Stock Exchange has been operating all the time. The module is used to capture market manipulations. By the end of November, the WSE will implement a new, world-class session supervision module. This will be an additional, definitely more advanced tool than the WSE uses today.


What do the works on the strategy for the entire capital market involve?

- The governmental strategy for the capital market is supposed to be an important element of the Strategy for Responsible Development. As a stock exchange, we support this project and we are actively involved in its implementation, waiting for the final results of the analysis, which are to be presented later this year. The draft strategy assumes the removal of significant regulatory barriers present on the capital market within six months, and all of them within two years.

We hope that together we will develop a coherent plan that will contribute to the success of the entire market. We hope that incentives for issuing and investing on the stock exchange will also appear.

How the promotion given by FTSE Russell impacts the stock-exchange?

- The decision of the FTSE Russell agency to recognize our capital market as a developed one is the crowning achievement in the long path. Let me remind you the most important events for the Community capital market. The first Stock Exchange in Poland was opened in Warsaw on May 12, 1817 - we still remember this date. The first session of the WSE, which was opened after the transformations in 1989, took place on April 16, 1991.

24 September 2018 will be remembered as the day our market got recognized as one of the 25 best developed economies in the world. This is a great success but at the same time a large commitment. There are many challenges for the market infrastructure institutions, regulators, banks and brokerage houses and issuers, associated with the need to meet high standards and expectations of investors placing their capital in developed markets. After reclassification, Poland is perceived by economic and financial environments as a stronger country.

What about the WSE strategic initiatives?

- Their implementation is in full swing. In June, we presented 14 WSE projects, this year we also plan to expose the details of one more interesting initiative. The new strategy refreshes the image of the stock exchange, especially for young people who want to allocate some percentage of their savings.

The first results of our strategy will be visible in the first quarter of 2019, when we will present a comprehensive educational programme “WSE Growth”. Its main assumption will be to support companies in creating their value through expansion using external sources of financing, with emphasis on development through the capital market.

We also focus on the construction of new platforms enabling buyers and sellers to meet. We are building a completely new market for small and medium-sized enterprises and start-ups - Private Market. It will be a new ecosystem with opportunities to raise capital, but also the entire system of services that start-ups need for development.

We also create a company, GPW Ventures, which will invest in venture capital funds operating at the pre-IPO stage.

Warsaw Stock Exchange was established in 1817 and was closed in 1939 when WWII broke out. It restarted its operations in 1991 after more than 50 years.


Employee Capital Plans should revive the Warsaw Stock Exchange. Where did the idea for a similar programme come from? Is it just an attempt to fill the space after OPF (open pension fund) or add money to the economy?

- The idea of introducing Employee Capital Plans was conceived in order to reverse the series of negative social and economic trends in Poland. In accordance with the government's Responsible Development Strategy, to increase the potential and stability of the economy, it is necessary to increase the savings ratios and financing of investments from domestic sources, increase financial security of Poles and stability of the public finance systems as well as develop the local capital market.

Employee Capital Plans are very important for us. They will be one of our main development engines in business lines related to the capital market. At present, we are preparing for the adoption of a new capital by actively searching for new issuers, expanding our product offer and working on new solutions that improve the liquidity and efficiency of the market: a platform for borrowing shares and the TCA Tool project.

What about the issue of pensions in the context of ECPs?

- It is also very important. From a social perspective, the primary goal is to safeguard pensions for future generations and reduce the gap in the level of income between the period of professional activity and retirement.

Unless there is a major reversal of demographic trends, retirement benefits for people who are younger than 40 years old, will be noticeably lower than their last salary. It is therefore necessary to create a pension system that differentiates the sources of retirement.

The percentage of persons who are saving for retirement in Poland grew significantly. Nevertheless, Poles save less than the citizens of the most developed countries. In addition, we save in a way that is not very effective from the perspective of retirement, which we are to receive several years or several decades from now.

In this perspective, returns from shares are approximately at the level of the nominal economic growth (GDP growth and inflation). Most popular deposits usually bring less than inflation. The ECP is a chance to increase the pension for those who are currently on the labour market.

How do you assess the potential impact of ECP on society and the capital market?

- The ECP will help the whole society grow richer. If we want all Poles to use economic growth in an inclusive manner, they should also start making money on capital.

The current pension system does not allow most citizens to take advantage of the economic leap forward. If citizens count only on the state system, the amount of their earnings will decide about their retirement.

Participation in the ECP will help to reduce the wealth gaps between Poles. In particular, people with lower income will be able to build property to finance the autumn of their lives, thanks to state subsidies and the fact that some of the funds from ECP will go to listed companies.

When it comes to numbers, how will ECPs affect the capital market and how will they affect pensions?

- The ECP's primary aim is to serve the future pensioners. Let's see examples of how the ECP will change our situation on retirement. We assume an average monthly gross wages in the national economy - PLN 4445; realistic average salary growth - 2.8 percent; realistic average return during the accumulation period - 3.5 percent; yearly asset management fee - 0.5 percent; realistic average interest rate on deposits for the last 5 years: 2.2 percent, monthly capitalization.

These values can be even higher when more companies enter the stock exchange. Today, more than one thousand enterprises issue shares and bonds on the Warsaw Stock Exchange.

There are still over 2.000 companies in Poland that could be listed. The funds of future pensioners gathered in the ECP will attract the best Polish companies to the stock exchange, and the profits of these companies will increase our pensions.

Okay, but what’s the use of all that? You can take out money from the bank at any time, and you don’t have to wait so long.

-      As shown above, ECPs are very competitive as compared to bank deposits. In addition to returns on investments, the employer and the state provide an additional annual subsidies to each zloty gathered by the employee every month. This way an employee who is depositing down capital on his ECP account collects three times the amount that is then professionally invested.

We should also remember that in certain cases, such as a serious illness or housing needs, we can withdraw funds from the ECP earlier than at the time of retirement.

Many of us are afraid that the ECP will become another open pension fund. Is this a well-founded fear?

-      There is a fundamental difference between open pension funds and employee capital plans: the funds accumulated in ECPs are private funds. This is of great importance. The savings may be inherited, and the state will not be able to take over our funds, as was the case of open pension funds in 2014.

Other differences are also significant. In contrast to open pension funds, fees are low, and the structure of these fees as well as greater flexibility in the construction of investment strategies, will force individual ECP operators to actually compete with each other. Let me remind other benefits: subsidies from the state and the employer, as well as the possibility of early withdrawal of funds for health and housing purposes.

 
The material was printed from www.wnp.pl. © Polskie Towarzystwo Wspierania Przedsiębiorczości (Polish Entrepreneurship Support Association) 1997-2018



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