The Prague Stock Exchange (PSE) was founded in 1992 to attract capital to the Czech Republic’s fledgling market economy. It became a member of the Federation of European Stock Exchanges in 2004 and was acquired by the Vienna Stock Exchange in 2008. The PSE expanded to include investment certificates and futures and developed the Prague Energy Exchange in 2007. It operates out of a postmodern glass building in the Old Town area of Prague.
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 of the Czech Republic, the PSE serves as the main financial exchange for that country, which until January 1, 1993, was part of Czechoslovakia. The modern Prague Stock Exchange – there was an exchange of the same name between 1871 and 1938 – was incorporated on November 24, 1992 to address the need to attract capital, including so-called hard currency, to the fledgling market economy of the new country. The exchange began trading on April 6, 1993. Founded by a consortium of 12 financial institutions and five brokerage houses, the PSE is a public limited company, and only authorized traders who are members are allowed to trade.
The Czech Republic joined the European Union in 2004, a banner year for the Prague stock exchange as well. In that year, the exchange became a member of the Federation of European Stock 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 American investors that the PSE could be considered a trusted place to trade.
In the spring of 2006, the Prague Stock Exchange expanded its activities to include investment certificates and futures. In a move inspired by power exchanges elsewhere in Europe, in 2007 the stock exchange developed the Prague Energy Exchange (PXE), which was renamed Power Exchange Central Europe, allowing electricity to be traded as a commodity. between the Czech Republic, Slovakia and Hungary. The exchange, with transparent trading based on supply and demand, was expected to stabilize the market and eliminate price shocks for consumers.
On November 7, 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 United States Dollars (USD). Notable international competitors that bid 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 into Central and Eastern Europe, which already included a majority stake in the Budapest, Hungary stock exchanges; and Ljubljana, Slovenia.
On January 14, 2010, Wiener Borse formed the EEC European Stock Exchange Group (CEESEG) as a holding company for the Vienna, Budapest, Prague and Ljubljana stock exchanges. All four exchanges are equal subsidiaries in the parent company, serving strategic, financial management, and administrative functions. Individual exchanges continue to conduct their respective trading operations.
Unlike many of the world’s largest stock exchanges, and without the need for a trading floor, the Prague Stock Exchange does not have a traditional monumental building. The PSE, by contrast, occupies offices in a mid-rise postmodern glass building in the Old Town area. Although the exchange is not the only tenant, the building is known as Burzovni Palác, which means “Palace of the Stock Exchange.”
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