Dear Sir or Madam,Wojciech Nagel

The 25th anniversary of the Warsaw Stock Exchange is a good moment to take stock of the historic quarter of a century with all its events, protagonists and developments which have accompanied the Exchange since inception to this date. It would be impossible to try and encapsulate those seminal 25 years in a single letter. Allow me, however, to make two important gestures. I wish to thank my predecessor, Dr Wiesław Rozłucki, and welcome Professor Małgorzata Zaleska, who has recently taken over as the President of GPW. Thus, in this jubilee year, we have witnessed a symbolic generational transition. Dr Rozłucki, a co-founder of the architecture of the capital market, who contributed to the reputation of GPW and its standards by enabling citizens once again to invest their private savings, has been replaced at the helm of the Exchange by Professor Zaleska, a prominent practitioner with experience in Poland’s key financial institutions. It is a sign of hope for a new opening in the changing market conditions.

It has been a quarter of a century and now we are heading into the coming years and decades fraught with volatility that many perceive as an opportunity for above-average returns. Those of you who are strongly interested in the economic position of Poland certainly know from observation that we operate in an increasingly complex political and social context, faced with previously unknown economic and migration pressures, as well as concerns about the very survival of the European Union. We can see that the mutual interactions between the market and society, the state and the economy have evolved, even though the function and importance of property rights hold strong in the corporate world.

I would like to share with you some strategic observations that depart from the mainstream discussions focused exclusively on finance or fundamental and technical analysis of the Exchange and listed companies.

What efforts do we need to take to ensure that the Polish capital market can continue to grow? We need to develop financial instruments which support safe investing and enhance market liquidity. It is important to note that Polish households have assets worth close to PLN 1.7 billion, of which approximately PLN 620 billion is deposited in bank accounts. Only 3% of the assets are invested in stocks of companies listed on GPW. However, we can provide companies with better funding and investors with higher gains if a part of bank deposits is converted into investments. To do this, small investors require a system of incentives to place their savings on the capital market, both in stocks and non-Treasury debt. Naturally, each investor must have a free choice to invest in other forms of capital. We should focus more on education activities which promote informed and safe investing.

It is important to promote the building and safe investing of private savings, including pension savings. The pension system should remain diverse and based on multiple pillars. According the EU’s 2012 White Paper, public pension schemes are the main source of security for the ageing European population. More than 120 million people (25% of the EU population) are retired. Senior citizens expect economic safety.

In my opinion, the alignment of Polish regulations with the international environment should take into account the interests of local market players (investors and shareholders), including prevention of regulatory arbitrage and providing banks with direct market access. Pension funds investing in derivatives and securities lending, subject to the exclusive supervision of the public regulator, would satisfy the principles of safe trading to the advantage of potential beneficiaries.

We will continue to foster confidence in the capital market by promoting standards of ethics, the code of best practice, the culture of compliance. They reinforce the reputation of public companies, grow their value and credibility to investors. In my opinion, codes of ethics, conflict of interest management, as well as compliance rules could be adopted in all State-owned companies together with a methodology of enforcement. 

We should promote trade in financial instruments on organised trading platforms and continue measures which reinforce trust in NewConnect and Catalyst by improving their mechanisms. It is role of GPW to support a safe market in non-government bonds as a competitive alternative to bank credit, which is limited under conditions of weaker markets and stricter collateral requirements.

I can see an important role for GPW in the implementation of the Government’s Programme for Responsible Development. The Exchange is where innovative companies of all sizes raise capital. GPW’s continued contribution to the growth of the Polish economy will benefit the Exchange, individual investors, as well as future pensioners.

I wish you optimism, successful investment decisions, as well as a bit of luck which never hurts. I do hope that the coming year will be better than the last. See you on the trading floor.

With best regards and greetings, 

Dr Wojciech Nagel

Chairman of the Exchange Supervisory Board