SEC chief gets chance to (briefly) rest on his laurels
He didn't quote from the booklet, which spells out the rules that govern Poland's capital markets, but he did look back at the early days and imparted his sense of success in decisions well taken, soon after the communist rulers peacefully handed over power to the Solidarity opposition in mid-1989.
He and Wieslaw Rozlucki and Leslaw Paga started in 1990 to map out plans for a stock market and an arms-length SEC, operating first out of the newly created Privatization Ministry, then moving to independent quarters.
Rozlucki, of course, is president of the Warsaw Stock Exchange (WSE); Paga, after heading the SEC initially, now heads Deloitte & Touche.
"We wanted to create a market that would be similar to a developed market," Socha said, aiming high, well beyond what many skeptics thought possible then. They were intent on laying out rules clearly for all to see - for traders, companies that might want to be listed and rank-and-file Poles who might want to invest.
Today, Socha's SEC and the WSE are among the most credible market institutions in Europe, far ahead of other markets in the region. The 255 listed companies equate to a market capitalization of about $30 billion, Socha said, with the problems of an Elektrim or a Universal a rarity.
WSE companies have increased their capital with new public issues more than 100 times - the only stock market in this region where that has been possible, he said. Two-thirds of investors are local folks, giving this country's stock market a stability others have lacked when emerging-market crashes have freaked out foreign investors.
Socha noted that 95% of all trades in the Czech Republic occur "off-market" - for example, in London, between traders or company participants but with real folks in Prague or elsewhere the last to know what's going on. There still is no arms-length SEC, with the ostensible economic reformer Václav Klaus still opposing any such thing.
"It's very very difficult to change the rules after the market has begun," Socha said, in a clear reference to the Czech situation. "We're called over-regulated but in fact we were creating standards."
In retrospect, he says, many company managers and owners have told him that the very process of preparing the SEC prospectus has given them their first comprehensive database about their own company.
Today, Socha says, there is even more pressure for information - but now the issue is how to balance the needs of the public, especially investors domestic and foreign, against the risks of giving too much information about companies to their competitors.
There are no shortages of cutting-edge challenges today, Socha said, including the new regional stock exchanges that are trying to tempt Polish companies into dual listing, with different financial instruments.
"They could be very tough competition for the Polish market. But we have to do what we have to do - create very effective operations and rules," he said. "It is not so much a question of Polish companies going to other markets but the much more important question is if investors already here would decide to buy company (stock or financial instruments) elsewhere, on other exchanges.
"This would be a very very big problem," he added.
When he read that the Budapest and Prague exchanges were proposing a Central European regional stock market, he invited the heads of the regulatory commissions to Warsaw to talk last month.
"I was astonished that they said, no, they're not interested in creating any new Central European stock exchange," he said.
That was good news, Socha said, because Poland needs to focus all its efforts on preparing its market for competition within the European Union (EU) and should not waste money and time getting sidetracked on a new regional platform.
• • •
P.J. (Peter) Griffin says Poland has proved to be good business for his Calgary-based engineering company, Gas Liquids Engineering. It specializes in managing medium-sized oil and gas projects (up to, say $100 million) and has worked here since 1994 with the Polish Oil and Gas Company (PGNiG), mostly in Zielona Gora, and with the Polish branch of a Swiss company, SGS, which does their day to day project overseeing.
They have sold some gas-processing equipment such as gas pumps here, and later this month Griffin will meet with Polish companies that make energy industry equipment. Canadian contractors already have been sub-contracting some work to Polish companies.
"I could see some of the larger pieces of equipment being fabricated here. They are large enough, and cost enough, for a local company to spend time and money to build them," Griffin says.
Rather than Canadian expatriates, the company has hired specialists from this region "who are experienced in their field but have a background in the country in which they working." In North America, and in the oil and gas industry, "a lot of decisions are made quickly - spending money, technical decisions. That ease of making decisions - which can mean changing designs or putting in more money - is not too easy to attain, in Eastern or Western Europe."
There is more bureaucracy in Western Europe and in Eastern Europe political control meant most lower officials made decisions at their peril. And so mostly they didn't.
Yes, Griffin said, he agrees with the truism that time is money. "But I see companies from North America here, pushing very hard. Our approach is to push hard, but in the end, to accept that the client may or may not wish to change his mind."
He and Wieslaw Rozlucki and Leslaw Paga started in 1990 to map out plans for a stock market and an arms-length SEC, operating first out of the newly created Privatization Ministry, then moving to independent quarters.
Rozlucki, of course, is president of the Warsaw Stock Exchange (WSE); Paga, after heading the SEC initially, now heads Deloitte & Touche.
"We wanted to create a market that would be similar to a developed market," Socha said, aiming high, well beyond what many skeptics thought possible then. They were intent on laying out rules clearly for all to see - for traders, companies that might want to be listed and rank-and-file Poles who might want to invest.
Today, Socha's SEC and the WSE are among the most credible market institutions in Europe, far ahead of other markets in the region. The 255 listed companies equate to a market capitalization of about $30 billion, Socha said, with the problems of an Elektrim or a Universal a rarity.
WSE companies have increased their capital with new public issues more than 100 times - the only stock market in this region where that has been possible, he said. Two-thirds of investors are local folks, giving this country's stock market a stability others have lacked when emerging-market crashes have freaked out foreign investors.
Socha noted that 95% of all trades in the Czech Republic occur "off-market" - for example, in London, between traders or company participants but with real folks in Prague or elsewhere the last to know what's going on. There still is no arms-length SEC, with the ostensible economic reformer Václav Klaus still opposing any such thing.
"It's very very difficult to change the rules after the market has begun," Socha said, in a clear reference to the Czech situation. "We're called over-regulated but in fact we were creating standards."
In retrospect, he says, many company managers and owners have told him that the very process of preparing the SEC prospectus has given them their first comprehensive database about their own company.
Today, Socha says, there is even more pressure for information - but now the issue is how to balance the needs of the public, especially investors domestic and foreign, against the risks of giving too much information about companies to their competitors.
There are no shortages of cutting-edge challenges today, Socha said, including the new regional stock exchanges that are trying to tempt Polish companies into dual listing, with different financial instruments.
"They could be very tough competition for the Polish market. But we have to do what we have to do - create very effective operations and rules," he said. "It is not so much a question of Polish companies going to other markets but the much more important question is if investors already here would decide to buy company (stock or financial instruments) elsewhere, on other exchanges.
"This would be a very very big problem," he added.
When he read that the Budapest and Prague exchanges were proposing a Central European regional stock market, he invited the heads of the regulatory commissions to Warsaw to talk last month.
"I was astonished that they said, no, they're not interested in creating any new Central European stock exchange," he said.
That was good news, Socha said, because Poland needs to focus all its efforts on preparing its market for competition within the European Union (EU) and should not waste money and time getting sidetracked on a new regional platform.
• • •
P.J. (Peter) Griffin says Poland has proved to be good business for his Calgary-based engineering company, Gas Liquids Engineering. It specializes in managing medium-sized oil and gas projects (up to, say $100 million) and has worked here since 1994 with the Polish Oil and Gas Company (PGNiG), mostly in Zielona Gora, and with the Polish branch of a Swiss company, SGS, which does their day to day project overseeing.
They have sold some gas-processing equipment such as gas pumps here, and later this month Griffin will meet with Polish companies that make energy industry equipment. Canadian contractors already have been sub-contracting some work to Polish companies.
"I could see some of the larger pieces of equipment being fabricated here. They are large enough, and cost enough, for a local company to spend time and money to build them," Griffin says.
Rather than Canadian expatriates, the company has hired specialists from this region "who are experienced in their field but have a background in the country in which they working." In North America, and in the oil and gas industry, "a lot of decisions are made quickly - spending money, technical decisions. That ease of making decisions - which can mean changing designs or putting in more money - is not too easy to attain, in Eastern or Western Europe."
There is more bureaucracy in Western Europe and in Eastern Europe political control meant most lower officials made decisions at their peril. And so mostly they didn't.
Yes, Griffin said, he agrees with the truism that time is money. "But I see companies from North America here, pushing very hard. Our approach is to push hard, but in the end, to accept that the client may or may not wish to change his mind."
