Two years ago, fDiMagazine coined the term 'Polish Bison' to describe the galloping economic success of Poland. One of the main factors behind this stampede has been the Warsaw Stock Exchange (WSE), which has not only become the leading regional exchange but is fast becoming a model for how to run a growing and successful bourse.

This year marks the 20th anniversary of the exchange, which in the past 12 months has seen swift expansion and has been ranked second only to the London Stock Exchange in Europe for the number and value of flotations. “Contrary to other exchanges in the region, we adopted very high standards from the beginning,” says Wieslaw Rozlucki, who was a co-founder and first president of the WSE and now is a senior adviser at Rothschild Polska.


Euro star

According to the latest IPO Watch Europe report published by PricewaterhouseCoopers, the WSE was number one in Europe for the number of initial public offering (regulated market and alternative stock market combined) listings in the first three quarters of 2011. There have been 61 new companies that have listed on the WSE’s main market and 54 companies that are now on NewConnect, which is similar to London’s Alternative Investment Market. This was the best quarterly result in the history of the WSE.

Another feather in WSE’s cap happened last year when a 'strategic, long-term co-operation' deal was hammered out between WSE and NYSE Euronext. The deal included the WSE now being able to use the Universal Trading Platform for its derivatives and cash markets. “We have been building a strong WSE brand over the past few years,” says Ludwik Sobolewski, the president of the stock exchange. "[We] should be seen as modern, universal and ready to take on challenges. Everything is done for the sake of the capital markets and the investors. Our motto is 'Success is never full and failure is never fatal'."

Success story

Though Warsaw has had some version of an exchange that dates as far back as 1817, it was only after the re-establishment of democracy in the country in 1989 that the WSE was able to properly begin doing business. In its early days, only five companies were listed on the exchange; today there are more than 400 companies on the main market, with an additional 220-plus companies on NewConnect.

The majority of companies are Polish, but there is a growing number of foreign companies listing on the Warsaw bourse. One of the major international players is Italy’s UniCredit bank, which has a secondary listing on the WSE. Ukraine has 11 companies that now trade on the exchange and last year a second company from Lithuania – the agricultural firm Agrowill Group – listed on the WSE. Coal Energy, a Luxembourg-registered coal and energy producer, has also recently begun trading on the WSE. “Foreign companies can find investors in all kinds of investor groups, which is our big strength. We will work towards keeping or even increasing such tendency,” says Mr Sobolewski. 

Warsaw's gift

Such an approach has made WSE stand out against other European exchanges, says Patrick Young, who is the executive director of DV Advisors, because it became an excellent platform for raising capital for businesses. “A lot of people have lost perspective of the fact that the reason we have stock exchanges is to raise capital for businesses, and trading things at 100 milliseconds between people is a derivation,” says Mr Young.

“I am not trying to depreciate that, but the new Europe needs capital and needs FDI desperately. The WSE’s incredible gift is that it can list companies with minuscule float fees compared with the West. There are no other markets in central and eastern Europe and south-east Europe that can remotely compete.”

However, that has not stopped some from trying. While there have been several recent articles trying to compare the WSE with the Vienna Stock Exchange (WBAG) – its value stands at €94bn, while the WSE has seen its worth go up to €142bn – Mr Rozlucki, for one, sees no similarities. “We have surpassed WBAG in every category so there is no characteristic in which Vienna is bigger or better,” he says.

Moscow is also different in that it is mainly still a domestic exchange, albeit for large Russian companies. The WSE, says Mr Young, is a unique exchange on the European landscape. “I think the [powers that be] at the WSE don’t wake up and look to see what London or Vienna are doing. They ask themselves, ‘How can we make this the best possible business we can, to provide shareholders with value and create a better WSE?',” he says. “The WSE is doing its own thing and being successful at that.”