Market infrastructure - Czech Republic
Institutions and organisation
Prague Stock Exchange (Burza cennych papiru Praha a.s.) - PSE (www.pse.cz)
Instruments traded: | Book-entry equities, corporate bonds, government bonds (excluding T-bills), financial bonds, investment certificates and warrants. |
Exchange Guarantee Fund: | Brokers must maintain a balance in the CDCP Clearing Fund, in accordance with the below attached parameters of the CSD clearing fund. |
Regulator: | CNB (Czech National Bank). |
Principal markets
Securities listed at the PSE are split according to market, as indicated below:
| Market | Value of registered capital | % Public issued capital | Min. years in operation |
| Official | In accordance with the Czech Business Corporations Act. | 25% | 3 |
| Regulated | In accordance with the Czech Business Corporations Act. | N/A | N/A |
| Unregulated | Segment, which is bound by disclosure requirements with regard to annual report and price sensitive information only and which allows the listing of issues without a request from the issuer. Any issuer applying for admission must have a guarantor assisting in the process of entering the PSE. The requirement for listing is publication of the information document or a prospectus of the issuer of the securities. | ||
Exchange Trading
The PSE is an “electronic exchange”. Trading is based on automated processing of orders concluded through the XETRA® Prague automated trading system (hereinafter referred to as XETRA®), by members of the PSE.
The following types of trading procedures are possible in Xetra®:
- Single auction trading;
- Continuous trading;
- Continuous auction.
Trading on the PSE can, in general, be divided into the following categories:
- Shares and bonds trading (see PSE Market Model Shares Bonds)
- Structured products trading (see PSE Market Model Structured Products)
Other trade types:
- Over-The-Counter (OTC) Trades
An OTC trade is a transaction, concluded outside the trading system of PSE, between a member of the PSE and a non-member or between two non-members of the PSE. - Futures Trades
Futures are no longer traded on the PSE: trading with futures was moved to Vienna Stock Exchange.
The Central Securities Depository (Centralni depozitar cennych papiru) - CSD Prague (www.cdcp.cz)
CSD Prague, formerly UNIVYC, a wholly owned subsidiary of the PSE, was granted a licence by the CNB to act as Central Depository on 14 August 2009. CSD Prague started its new role as Czech CSD on 7 July 2010 taking over the records and databases of the previous central securities register, the Securities Centre (Stredisko cennych papiru) - SCP.
| Instruments held: | All book-entry securities, including bonds (government bonds with maturities over one year) and equities. Units of unit trusts are kept with the Unit Trusts that are their primary registrars. |
| Participants: | Eligible participants of CSD are listed in Capital Market Act 256/2004, §109 clause 3 and include banks, securities brokerdealers, investment companies, regulated market organisers, foreign CSDs, Czech National Bank, the Czech Republic, acting through the Ministry of Finance, foreign central banks or a European Central Bank. |
| Regulator: | Czech National Bank (CNB). |
CSD Prague recognises two different account types: the Client Account and the Owner’s Account:
- A Client Accounts is the only type of account that can be opened by local pension and investment funds and Client Account owners are subject to more stringent obligations to report to the CNB.
- The Owner's Account holder is deemed to be the owner of securities registered on the account unless proven otherwise.
Securities settlement happens in the CSD Prague directly but, when an instruction is against payment, cash settlement is executed by the clearing centre of the Czech National Bank (CNB). Owing to the mismatch between securities and cash movements, one of the parties is always exposed to settlement risk.
The CNB Registration Centre (Ceska Narodni Banka, SKD Registracni centrum) - (www.cnb.cz)
| Instruments held: | Short-term government bonds with maturities up to one year in book-entry form. |
| Participants: | Agents (custodians) and clients (investors). |
The short-term bond market organised by the Central Bank uses its own depository. An account holder can open several accounts. The account holder is deemed to be the owner of securities registered on the account unless proven otherwise.
Regulatory structure
Czech National Bank (Ceska narodni banka) - CNB (www.cnb.cz)
The CNB is an independent body established by the Czech National Banking Act, No.6/1993 Coll. CNB is responsible for the supervision of the banking sector, capital market industry (broker-dealers, mutual funds, investment companies, etc.), insurance sector, pension scheme industry, credit unions, and foreign exchange. CNB is exercising the regulation and supervision via three key departments: the Financial Market Supervision Department, the Licensing and Sanction Procedures Department, and the Financial Market Regulation and Analyses Department.