- Warsaw Stock Exchange has approved amendments to the regulations applicable in the alternative trading system (ATS) on Catalyst and NewConnect
- The main objective of the amendments is to improve safety on Catalyst and to harmonise the Catalyst ATS regulations with the standards introduced last year on NewConnect
- The amendments cover several areas the key of which include: introduction of a minimum value of an issue of bonds which may be introduced into the ATS; obligation imposed on issuers of low-value issues to have an Authorised Adviser; mandatory preparation of an information document even where bonds were previously offered under an information memorandum
- In order to improve bondholder access to information relevant to bond payments, the duration of issuers’ reporting requirements has been extended
- The amendments take effect on 1 September 2014. The requirement of a minimum value of bonds introduced into the Catalyst ATS takes effect on 1 January 2015
The WSE Management Board has approved amendments to regulations applicable on the Catalyst and NewConnect markets. The main idea behind the reform is to improve the safety of investors on the debt market by reorganising the applicable regulations of the alternative trading system and improving the introduction of bonds into the Catalyst ATS. The amendments also harmonise the standards applicable on Catalyst with the standards introduced in the reform of the NewConnect market in 2013. Most of the amendments take effect on 1 September 2014.
“We have reformed several key areas including: the terms and conditions of introducing debt instruments into the market; the standards of the information document prepared in connection with introduction to Catalyst; the reporting requirements for issuers; and the terms of operation and the fees on Catalyst. The objective is to improve transparency and thus to enhance the quality of the debt market, which is certain to benefit both investors and issuers,” said Beata Jarosz, Vice-President of the WSE Management Board.
The key amendments include the obligation imposed on issuers to execute an agreement with an Authorised Adviser concerning preparation of an information document; this will help to improve the quality of documents and the introduction of instruments into the ATS.
Furthermore, the amendments imposing the obligation of preparing financial statements for the last financial year and, for a specific type of special-purpose vehicles, inserting the consolidated financial statements of the holding entity in the information document will harmonise the standards applicable in the alternative trading systems on NewConnect and Catalyst.
Another key amendment imposes the obligation of preparing an information document regardless of bonds being offered under an information memorandum. This amendment will expand the scope of information provided by issuers, improving safety of investors. The obligation will facilitate access to reliable information on the condition of the company, thus mitigating investment risks.
“We have focused on the regulations applicable on Catalyst; however, some of the amendments also apply to NewConnect. The WSE Management Board has decided among others to restrict the group of entities authorised to prepare a document including among others the results of an analysis of the financial and economic standing of issuers exclusively to Authorised Advisers who have not provided Authorised Adviser services to the issuer in the last three financial years. The amendment will help to improve the quality and content of reports,” said Beata Jarosz.
In order to improve the transparency of bond issuers, WSE has also decided to extend the duration of reporting requirements imposed on bond issuers until the early redemption date (if any) or the redemption date under the terms of issue. The requirement of defining risk factors in the information note will allow market participants to conduct an appropriate valuation of investment risk; it will also enhance safety of trading by providing investors with information on potential threats and risks related to the issuer’s position and its financial instruments.
The WSE Management Board has also decided to raise the minimum fee (from PLN 1,500 to PLN 6,000) and the maximum fee (from PLN 30,000 to PLN 50,000) charged for introduction of bonds into the ATS.
Detailed list of amendments by area:
Amendments of the terms and conditions of introducing debt instruments into the ATS:
- imposing the obligation on the issuer to have an agreement with an Authorised Adviser for the purpose of introducing bonds to the ATS. Currently only issuers of shares introduced to NewConnect are required to execute such agreements.
The following are exempted from the obligation of having an Authorised Adviser:
- issuers whose financial instruments are traded on the regulated market;
- local government units and issuers of instruments guaranteed by the State Treasury; and
- issuers whose aggregate nominal value of debt instruments concerned by the application or aggregate nominal value of debt instruments concerned by the application and traded is at least PLN 5 million;
- introduction of the minimum value of bonds to be introduced to Catalyst at PLN 1 million (which may include the issuer’s bonds already in trading);
- introduction of the obligation of inserting the financial statements for the last financial year in the information document and inserting the consolidated financial statements of the holding entity for a specific type of special-purpose vehicles (SPV);
- addition of a provision which allows for the introduction into trading of securities of an issuer with a complex history even in the absence of annual financial statements.
Amendments to the standard information document prepared in connection with introduction to Catalyst:
- introduction of the obligation of preparing an information document for issuers making a public offering up to EUR 2,500,000 under an information memorandum (Catalyst and NewConnect); currently issuers making a public offering up to EUR 2,500,000 prepare for the purpose of the offering an information memorandum (which is not subject to approval by the Polish Financial Supervision Authority or to other administrative procedures of similar nature) whose scope in material respects is narrower than the scope of an information document;
- discontinuation of the option of introducing debt instruments to Catalyst under a current report; currently the procedure of introducing instruments under a current report is practically never used: in such case, issuers prepare a special information document known as information note;
- introduction of the obligation of defining risk factors in the information note;
- introduction of the obligation of inserting the following in the information document:
- information concerning the results of a debt instrument offering; currently issuers on Catalyst are not required to insert information on the parameters of a completed offering related to the introduction of instruments into trading; the amendment will improve access of Catalyst investors to such information;
- interim (six-month) financial statements where the application for introduction is filed more than three months after the end of the six-month period;
- professional CVs of members of the management board and the supervisory board including information of the same scope as applicable on NewConnect;
- whether the activity of the issuer requires a permit, licence or approval for a specific type of activity (Catalyst and NewConnect) and details of held permits, licences or approvals;
- option of including references to the terms of a bond issue in the information document section containing financial instrument details.
Amendments to the reporting requirements:
- extended duration of the reporting requirements of bond issuers until the early redemption date (if any) or the redemption date under the terms of issue;
- introduction of the obligation of publishing a current report in the event that the amount of payments in respect of bonds is not paid when due, in whole or in part; currently the reporting requirement concerning default under obligations in respect of debt financial instruments derives from the “general clause” whereby issuers should publish information on all circumstances and events which may affect the issuer’s capacity of meeting liabilities under bonds;
- introduction of the obligation of subsidiaries (SPVs which raise capital subsequently distributed within the group of companies) to publish periodic reports of the holding entity.
Amendments to the Catalyst Operating Rules:
- discontinuation of the mechanism of “authorisation by Catalyst”;
- discontinuation of the requirement for issuers to provide grounds when filing an application for introduction of debt instruments to all or only one of Catalyst markets;
- elimination of existing inconsistencies between the Catalyst Operating Rules and the other regulations with respect to the dates of admission/introduction.
Amendments to Catalyst fees:
- increase of the minimum fee for introduction to the ATS from PLN 1,500 to PLN 6,000 (identical to NewConnect);
- increase of the maximum fee for introduction to the Catalyst ATS from PLN 30,000 to PLN 50,000.
Other amendments to the regulations of the alternative trading system:
- restricting the group of entities authorised to prepare a document including among others the results of an analysis of the financial and economic standing of issuers exclusively to Authorised Advisers who have not provided Authorised Adviser services to the issuer in the last three financial years; currently a report may be commissioned to any investment firm or any other selected entity which is a company or partnership under commercial law and provides services related to business transactions.
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Warsaw Stock Exchange is the biggest securities exchange in Central and Eastern Europe. WSE organises trading on one of the most dynamically growing capital markets in Europe. WSE operates a regulated market of shares and derivative instruments and the alternative stock market NewConnect for growing companies. WSE is developing Catalyst, a market for issuers of corporate and municipal bonds, as well as commodity markets. Since 9 November 2010, WSE is a public company listed on Warsaw Stock Exchange. For more information visit www.gpw.pl