• The re-establishment of equity markets in the CR has been designed to run parallel to the country's privatisation programme, which aims to privatise more than USD33 billion worth of property over a 5-6 year period. Shares may be acquired in the following ways:

- individually, through the voucher privatisation programme;
- collectively, through the voucher privatisation programme (via investment privatisation funds);
- through direct purchases for cash by management or other (i.e. foreign) investors.

  • These elements of the shareholder base are supplemented by shareholders purchasing shares for cash through the market, either from earlier holders or through new public offerings.


  • The Prague Stock Exchange opened in April 1993 with 12 monetary institutes and five brokerage firms as its founding shareholders. The Exchange traded USD 0.3 billion between April and December 1993, USD 2.3 billion in 1994 and USD 7.2 billion in 1995. Average daily trading volume in 1993 was USD 8.1 million, in 1994 USD 14,3 million and in 1995 USD 30.9 million. The Exchange is chaired by Richard Salzmann with Jioi Franc acting as chief executive.
  • The Exchange trades daily from 8am-4pm.
  • Trading System: The trading and information system is based on a central automated trading system. The automated trading system is based on the concentration of, and demand for, securities up to a certain time-order-driven system. Market price of all securities is set in this automated system once a day. Except for this basic system, three other trading segments are used at the Prague Stock Exchange: continuous trading at a fixed price, direct trades in blocks of securities and automatized trades in blocks of securities. Trading is organized five times a week.

Direct trades are concluded between members, recorded in the automated trading system and settled through the Exchange Register of Securities. Price of direct trade is not limited.

Only PSE members can be participants in automatized trades in blocks of securities. A block of securities represents the minimum value of one order. Presently it is set at Kc500 000. Data on direct trades with blocks of securities are periodically made public including the minimum and maximum prices attained.

The third method of trading is the over-the-counter market which operates by directly accessing the Securities Centre. Estimates for OTC activity range up to about 45% of all capital market activity.

  • Off-Stock Exchange Trading: The Securities Act allows for off-exchange trading, primarily for the millions of shareholders involved through voucher privatisation. The RM-SYSTEM, a joint-stock company operating the "RM-S" system from 430 "share shops" throughout the CR, acts as an organiser of the securities market and is independent of the Prague Stock Exchange. Individual investors and legal entities can buy and sell shares of about 1,700 companies and investment funds through these share shops which are connected to a central computer and pricing mechanisms.
  • Clearing System: Concluded exchange deals are cleared by the Securities Register Ltd., an offshoot of the Prague Exchange, on the third day following conclusion of the deal through the Czech National Bank's clearing centre. All exchange deals between members are guaranteed clearing; a Guarantee Fund covers the risks and liabilities inherent in exchange trading.
  • Membership: A precondition for exchange membership is that the principal business activity is securities trading on the basis of permission granted by the Ministry of Finance of the Czech Republic. A member of the exchange can trade on another personïs or his own account or both concurrently. All major banks, as well as some non-bank brokers, are members of the Exchange. The Czech National Bank and the National Property Fund of the Czech Republic are PSE members by virtue of law.

As in other foreign exchanges, PSE members give investors advice and provide representation for a wide range of security negotiations, including sales and purchases. As at December 31,1995 the Prague Stock Exchange had 102 members of which 63 are shareholders.

  • Regulation: Regulation of exchange is conducted according to the following laws:

- the Stock Exchange Law No. 214/1992 allows authorisation of the Exchange under the Ministry of Finance;
- the Investment Funds Law outlines the legal and supervisory arrangements for investment funds, particularly those involved in the voucher privatisation process;
- the Securities Law outlines the basic legal position of securities in the CR, arrangements for registration, and the aforementioned "off-exchange" market; 
- the Debenture Law (1990) and the Commercial Code (1991).
- the new Foreign Exchange/Currency Act No. 219/95 - approved in September 1995. The act provides for full convertibility of the Czech crown for current account account transactions and partial convertibility for capital account transactions. Issue of foreign securities for public and non-public trading in the domestic market is regulated by the Czech National Bank. Permission of the Ministry of Finance is required for trading bonds and securities in the public market.

Fundamental to market supervision is a "securities commission" set up within the Ministry of Finance. This commission is responsible for handling the authorisation of exchanges through the Exchange commissioner, securities dealers, and investment funds, for setting appropriate listings, and for reporting security obligations.

For further information contact CzechInvest at Politickych veznu 20, 112 49 Prague 1, Czech Republic Phone (42-2) 2422-1540 Fax: (42-2) 2422-1804

NOTE: Although we have made every effort to ensure the reliability of our sources, CzechInvest does not assume responsibility for its accuracy.