The bond market Catalyst was launched on 30 September 2009. It operates on transaction platforms of the Warsaw Stock Exchange and BondSpot (formerly MTS CeTO). Catalyst comprises four trading platforms. Two platforms operated by the WSE (a regulated market and an alternative trading system) are dedicated to retail investors; two BondSpot markets (regulated market and ATS) are dedicated to wholesale investors.
All platforms support trading in non-Treasury debt instruments: municipal bonds, corporate bonds, and mortgage bonds. The Catalyst architecture ensures that the market can accommodate issues of different sizes and parameters and serve the needs of different investor groups: wholesale and retail investors, institutions and individuals.
The rules of trading on the regulated markets and in the alternative trading systems are identical and the only differences apply to block trades. Execution of transactions on all Catalyst markets is guaranteed by the National Depository for Securities. Issuers are bound by reporting requirements including current and periodic reports.
Authorisation of bonds on Catalyst means that issuers accept reporting requirements set out in the Rules and the issue is registered in the Catalyst information system. Issuers whose issues have not yet been dematerialised may also apply for issue authorisation.
Catalyst authorisation opens the public market also to those issuers whose bonds have already been issued and are wholly or party held by bond-holders. Catalyst authorisation tells the investors and partners of a local government or corporate issuer that the issuer is a public company, transparent and accountable to the market and business environment, as demonstrated by compliance with the Catalyst reporting requirements, which are identical as those applicable to issuers of instruments introduced to trading.
If an issuer is in breach of Catalyst regulations, for instance due to non-compliance with the reporting requirements, the issuer’s authorisation may be revoked and its bonds may be delisted.
Initial Public Offering (IPO)
If the sale on the primary market is a public offering, bonds may either be allocated by an investment firm or within the WSE’s IT system. The latter option has the advantage of opening the IPO to a large group of potential buyers: all clients of Exchange Members.
The rules of trading in all instruments introduced to Catalyst are the same: all instruments are traded in the continuous trading system. The trading schedule of the continuous trading system is the same for the regulated market and the alternative trading system, as follows:
|8.30 – 9.00||Pre-opening phase (opening call)|
|9:00||Opening (determination of the opening price)|
|9:00 – 16.50||Continuous trading phase|
|16.50 – 17.00||Pre-closing phase (closing call)|
|17.00||Closing (determination of the closing price)|
|17.00 – 17.05||Pre-opening phase (next session opening call)|
All entities with Catalyst Participant status are allowed to conduct operations on the Catalyst market. The following categories of entities may become Catalyst Participants:
1) investment firms;
2) foreign investment firms;
3) credit institutions;
4) other entities which fulfil the requirements of relevant regulations and give the assurance of proper performance of obligations related to operation on Catalyst.
A Catalyst Participant may submit orders and conclude transactions in all instruments introduced to trading on its own account or on clients’ account.
The creation of a public market of municipal and corporate bonds under the Warsaw Stock Exchange brand gives local governments and companies a new opportunity of raising inexpensive capital for necessary investments. It makes issuers more reliable to investors and contractors and can work as a great marketing tool to promote an issue of bonds as well as the issuer: a municipality, a district, or a company. Compliance with the reporting requirements and up-to-date market quotations of issued securities can help issuers to raise capital more easily in future and may ensure a higher valuation of subsequent bond issues.