Warsaw Exchange Purchase From NYSE May Start Alliance (Correct)

(Corrects spelling of company name in penultimate paragraph of story published July 26.)

The Warsaw Stock Exchange’s purchase of a trading platform from NYSE Euronext may be the first step in an alliance as the Polish bourse prepares to go public, said Duncan Niederauer, the U.S. company’s chief executive officer.

Central Europe’s biggest equity venue by value agreed to acquire a cash and derivatives trading platform provided by NYSE Euronext’s Technologies, the two bourses said July 12 in a statement. They didn’t disclose the financial terms.

The relationship with the Warsaw market is a “strategic partnership that is going to go far beyond technology,” Niederauer said today in New York. “They are positioned to be a winner in that region, and we aim to help them succeed.”

The technology will make the Warsaw exchange more attractive to companies planning public offerings and to investors trading on the market, said Ludwik Sobolewski, the Polish company’s chief executive officer. The Warsaw exchange plans an initial public offering in November as Poland’s treasury ministry seeks to sell shares in the firm to help finance the government’s widening budget deficit.

The treasury ministry will hold about “35 percent of the share-holding capital” in the company, Sobolewski said. The Warsaw market may consider selling a stake to an exchange operator, he said. Companies listed on the exchange have a total capitalization of $156 billion, according to Bloomberg data.

The exchange executives spoke at a press event at the New York Stock Exchange.

Global Business

NYSE Euronext is expanding its trading-related technology services as the company alters its mix of global businesses. The company earned 17 percent of its net revenue in the first quarter of this year from technology services, up from 14 percent a year earlier, Chief Financial Officer Michael Geltzeiler said on an earnings call on May 4.

Niederauer said he expects the Warsaw exchange to become a “capital markets hub” in central and eastern Europe. The alliance could expand to listings, market data products and cross trading of cash and derivatives over time, he said.

While NYSE Euronext “wouldn’t see a need to do similar things with other exchanges in the region,” the relationship with the Warsaw exchange could facilitate investors’ access to other smaller markets in that area, he said.

Double Volume

The CEE Stock Exchange Group, which includes bourses in Vienna, Budapest, Prague and Ljubljana, may double the volume traded within four years as the markets introduce the same electronic system, said Michael Buhl, the Vienna Stock Exchange’s co-chief executive officer. The three other markets plan to switch to the Deutsche Boerse Group’s Xetra platform, which the Vienna venue already uses, by the end of 2011.

The Warsaw exchange gets a third of its volume from clients outside Poland, Sobolewski said. Another third comes from institutions trading within the country and the rest from individual investors.

Companies in Poland raised $4.28 billion in 32 IPOs so far this year, exceeding the $3.89 billion raised in Brazil in eight IPOs, according to Bloomberg data. The largest IPOs on the Warsaw exchange were energy utility Tauron Polska Energia SA, which raised $1.25 billion on June 30, and insurer Powszechny Zaklad Ubezpieczen, which sold $2.79 billion of stock that started trading on May 12.

The Warsaw market traded shares valued at 3.89 billion euros in June, compared with 2.94 billion a year earlier, data from the Brussels-based Federation of European Securities Exchanges showed.

To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net.

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