CZECH EQUITY TRADING / CZECH SHARES
INVESTING IN CZECH STOCKS – TRADING SYSTEMS
- SPAD
- KOBOS
- RMS
TRADING ON BCPP, a.s. (OR PRAGUE STOCK EXCHANGE)
CAPITAL PARTNERS, a.s. arranges for trades in all major markets
- Main
- Secondary - OTC
- Free market
As well as is in all featured segments:
- Fixing – fixed price trading
- Continuous trading with various pricing (KOBOS)
- Continuous trading with fixed price
- Shares and bonds trading system (SPAD)
SPAD
Our company offers SPAD system trading, where the most liquid and best of quality stocks trade (so called Blue Chips).
Number of shares which trade there is standardized and it’s called “lot” (for example, in the case of “Komercni banka” shares as of 03/01/06 1 lot equals 1000 shares)
What we offer to our clients is to trade even without depositing the whole share value. It is sufficient for client to deposit only 20 to 30% from the purchase share price and our company will take care of the rest of financing or we can arrange for so called REPO operation (loan backed by securities transfer). With this type of trading MARGIN EFFECT can be used, where with lesser amount of funds one can trade with large value of securities.
Trading on Prague’s Stock Exchange – BOCP - Burza cenných papírů Praha, a.s. on SPAD – the shares and bonds trading system
SPAD is abbreviation for “system for market support of shares and bonds”, where greater amount of liquidity of stock market is arranged. By Liquidity on BCPP, we mean trading in hundreds of thousands of numbers of securities at various prices depending on offer or demand.
Each particular shares (titles) trade, as mentioned, in lots. One LOT is beforehand assigned number of shares by BCPP. Shares of mainly strong companies, with yearly revenues over 10 billion Czech crowns trade on SPAD, especially companies from banking sector, telecommunications, energy – utility, companies that depend not only on their own corporate results, but also on overall political situation in our country, on GDP growth, inflation data, CNB – Czech central bank monetary policy and other sector data as well as developments of global equity markets. Next table shows all titles, incl. number of shares, which trade on BCPP in SPAD.
Parameters / SPAD (as of 03/01/06)
| Symbol | LOT (no. shares) |
| CETV | 1000 |
| ČESKÝ TELECOM | 5 000 |
| ČEZ | 5 000 |
| EBSN | 500 |
| Erste Bank | 2 000 |
| Komerční banka | 1000 |
| Orco | 500 |
| Philip Morris | 100 |
| Unipetrol | 10000 |
| Zentiva | 3000 |
Selected technical parameters for SPAD
SPAD is open from 9:30am till 4:00pm, when all Market Makers publish their quotes (bids and offers) for share titles in which they make markets. During this time one can trade but only in allowed spread, which is defined as best bid and offer plus 0,5%. The standard trade in SPAD is considered to be a transaction where the amount of securities traded is according to given parameters and settles T+3. For each client to be able trade on SPAD it is important he or she has a valid Consignment Agreement with CAPITAL PARTNERS, a.s. – Licensed Broker-dealer and has the necessary funds deposited on clients account with CAPITAL PARTNERS, a.s. Moreover, he or she needs to have a valid account open with the Czech securities central depository - Středisko cenných papírů - SCP, where all Czech securities are in custody. We are able to arrange for that, shall the client does not have it. This excludes foreign securities, such as Erste bank, where trades are not evidenced with SCP. In that case we are able to arrange for our clients an account with UNIVYC. Other important thing is communication between broker and client as far as instructions, buy and sell orders. Here there are several choices: by phone, fax or personally.
Client can enter within one day long or short positions. Long is, where at first we buy at the market and after the price goes up we sell with a profit – one can use margin for this transaction. Short uses the opposite share price move, here we sell at first without owning the shares awe wait for correction. If correction happens and price does go down to price level we desire, we buy the shares with the profit back (when we buy back, we call it “cover”). One can also use margin for this transaction.
For longs or shorts we offer Margin. What is means that client needs to deposit only 20 to 30% of the balance, we will take care of the rest and one can to start to trade. The margin balance supplied by the broker has an applicable interest rate in accordance with the Supplementary Agreement. Client can also take advantage of so called REPO operation, which is loan backed by transfer of your own “LOTS” of securities.
BCPP continuous trading - (KOBOS)
The continuous trading, previously called “KOBOS”, is, same as SPAD, exchange execution system. This system is friendlier toward small investors and the main difference to SPAD is that it is not limited in quantity of traded securities. One can buy or sell even one share, but it is not unusual to see “continuous trading” in millions and millions. Same as SPAD, the settlement is T+3, where T is the trade date, but the liquidity is substantially lower. So the opportunity to open and close transaction happens only seldom.
Advisory to the issuers of securities
- Cancellation or registration of shares
- Advisory with regard to minority shareholders and structure of ownership
- Public “buy-backs” on the open market
- Other transactions
- Search for strategic investors
Cancellation and registration of shares
One of the special advantages of CAPITAL PARTNERS, a.s. is cancellation of registration of shares. The possibility to have registered shares is meaningful only for large companies with base capital above 100million Czech crowns and which are able to raise funds for their business activities on the open capital markets. Small and midcap companies with low liquidity do not fit into this category so question remains whether it is of any use or advantage for a company to stay as a registered share company. Our clients have all the complex methodology and advisory as far as cancellation of registration available, including realization of public “buy-backs”. On the other hand, we can register a company including the issuer’s prospectus and other necessary related steps.
Advisory with regard to minority shareholders and structure of ownership
The ideal scenario in solution-finding with regard to structure of ownership is a gain of full majority with lowest effort and resources possible.
As far as this problem goes, we can say that our company CAPITAL PARTNERS, a.s. has for our clients detailed, well prepared and though-over and from a legislation point of view ready solution available. Those very effective steps lead to final resolution with so called “dead-souls”, inactive shareholders. Those shareholders do not participate on general assemblies, do not show interest in company’s management, do not know about their share ownership or perhaps are not even existent. Those shareholders are pretty much dispersed-out, but their shares sum up to a very decent stake.
This quite unique and original methodology really finishes the problem of dispersed-out ownership structure to the final point.
Each step of this methodology is carefully analyzed from the legal point of view. And with selected companies, where it has been applied in practical terms, confirm its high efficiency.
Public “buy-backs”/auctions of securities
The Czech Commercial Code states in concrete provisions under what circumstances can be public “buy-back”/auctions applied. A company is allowed to do public “buy-back”/auction, incl. price definition based on expertise and confirm of transfer of securities and settlement of a purchase price. From our own experience we know exactly the “weak points” and where one should focus.
Search of strategic investors
In case of interest from the side of upper-management or a majority shareholder, our company is able to find a strategic investor and realize even very complicated sale of a majority stake, for example including a raise of a base capital.
Other services
Trading with not-registered securities
We can facilitate trading also with not-registered securities, which do not trade on public exchanges such as BCPP or RM-System (OTC). Those are often not well known, less liquid shares.
Transfer of securities in SCP (Central Depository of Securities)
For our clients we can also arrange transfers in the SCP, directly, at the counter or electronically (in case of a larger amount). This is the case especially with shares which lost its registration status.
