Leading organiser of the securities market in the Czech Republic

Legislative requirements for the functioning of the Czech Republic's capital market
Since 2000 the Czech capital market as a whole has seen significant legislative changes. The main purpose of these extensive changes has been to bring the capital market into line with developed capital markets abroad and to implement European Union recommendations relating to the capital market. Legislative amendments have also had their effect on the Exchange's rules and regulations.

Membership and the Exchange's inspection activity
The Prague Stock Exchange is based on the membership principle. An Exchange member must simultaneously be a member of the Exchange's Guarantee Fund, the resources of which are used to secure the commitments arising from the settlement of Exchange trades. Membership is restricted to those who meet certain requirements - minimum amounts of paid-up registered capital and liquid assets in the form of cash. The Exchange pays special attention to its inspection work, and the effectiveness of this has been considerably increased by the new powers given to the Exchange in relation to Exchange members, more consistent enforcement of the Exchange's rules and regulations, and the introduction of automated checks on trades concluded and trading documentation.

Structure of the securities market
At the PSE securities are allocated to three markets: the Main, the Secondary and the Free. A fourth, the New market, is intended for young, dynamically expanding companies which show high growth potential. Admission of securities on the PSE is in competence of the Exchange Listing Committee. The Exchange's listing regulations, which again were created in collaboration with experts from the London Stock Exchange, require all issuers to fulfil the information disclosure duties imposed by the Securities Act (submission of an annual report, including financial statements, a half-year report and all other information which can affect the issue's price). In the case of issuers whose securities are registered on the PSE's Main, Secondary and New markets, the Exchange's regulations impose other quarterly-based duties. Companies on the Main market have an additional duty to submit an ordinary financial statement drawn up in accordance with IAS.

As at 30 June 2002, 92 share and unit issues and 84 bond issues were registered on the Exchange. In November 2001, the first bond issue denominated in the Euro was registered for trading on the PSE. Two other bond issues in the Euro followed, and at the end of August 2002 trading in the first foreign share issue of the Austrian company Erste Bank on the Exchange's Main market was opened.

The trading and information system
The PSE's trading and information system is based on the French system and is continually adapted and improved in order to make its systems secure, simplify trading and strengthen the transparency of operations.

The Exchange's trading system allows realisation of trades involving market-makers in the PSE's SPAD segment, of auction and continual automated trades and block trades. The price-driven SPAD system is designed for the most liquid share titles. Auction and continual represent an order-driven system. Automated trades and SPAD trades are concluded in the Exchange's system and guaranteed, which means that they are covered by the Exchange's Guarantee Fund. Block trades are only registered in the Exchange's system and are not covered by guarantees.

Settlement
Exchange trades concluded are settled by the PSE's 100%-owned subsidiary UNIVYC. Since mid-2000 it has been linked to the foreign Clearstream settlement centre, and this allows it to settle trades in foreign securities.

Prague Stock Exchange
Rybná 14
110 05 Prague 1

Tel.: + (420 2) 2183 1111
Fax: + (420 2) 2183 3040
E-mail: info@pse.cz
http://www.pse.cz

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