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What is the Prague Stock Exchange?

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  • Written By: Randall J. Van Vynckt
  • Edited By: A. Joseph
  • Last Modified Date: 04 November 2016
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The Prague Stock Exchange (PSE) is one of the largest clearinghouses for financial securities in Central and Eastern Europe (CEE). Located in Prague, the capital city of the Czech Republic, the PSE serves as the primary financial exchange for that country, which until 1 January 1993 was part of Czechoslovakia. The modern Prague Stock Exchange — there was an exchange with the same name from 1871-1938 — was incorporated on 24 November 1992 to address the need for drawing capital, including so-called hard currency, into the new country’s fledgling market economy. The exchange opened for trading on 6 April 1993. Founded by a consortium of 12 financial institutions and five brokerage firms, the PSE is a joint stock company, and only licensed traders who are members are allowed to trade.

The Czech Republic joined the European Union in 2004, a banner year for the stock exchange in Prague, too. In that year, the exchange became a member of the Federation of European Securities Exchanges. In addition, the United States Securities and Exchange Commission granted the Prague Stock Exchange the status of a “designated offshore securities market,” an indication to U.S. investors that the PSE could be considered a reliable venue for trading.

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In the spring of 2006, the Prague Stock Exchange expanded its activities to include investment certificates and futures. In a move inspired by energy exchanges elsewhere in Europe, in 2007 the stock exchange developed the Prague Energy Exchange (PXE), since renamed Power Exchange Central Europe, which allows electricity to be traded as a commodity among the Czech Republic, Slovakia and Hungary. It was hoped that the exchange, with trading transparent and based on supply and demand, would stabilize the market and eliminate price shocks for consumers.

On 7 November 2008, the Vienna Stock Exchange, owned by Wiener Börse AG, acquired a 92.7 percent stake in the Prague Stock Exchange for an estimated price of more than $300 million US Dollars (USD). Notable international competitors bidding against Vienna included the New York Stock Exchange, the London Stock Exchange and Germany’s Deutsche Börse. The purchase was part of Wiener Börse’s expansion in Central and Eastern Europe, which already included a majority ownership in the stock exchanges of Budapest, Hungary; and Ljubljana, Slovenia.

On 14 January 2010, Wiener Bőrse formed the CEE Stock Exchange Group (CEESEG) as a holding company for the stock exchanges in Vienna, Budapest, Prague and Ljubljana. The four exchanges are equal subsidiaries in the parent company, which serves strategic, financial management and administrative functions. The individual exchanges continue to conduct their respective business operations.

Unlike many of the world’s larger stock exchanges, and with no need for a trading floor, the Prague Stock Exchange does not boast a traditional, monumental building. The PSE instead occupies offices in a postmodern glass midrise in the Old Town area. Although the exchange is not the only tenant, the building is known nonetheless as Burzovni Palác, which means "Stock Exchange Palace."

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