WHAT Mi FID MEANS FOR LJUBLJANA STOCK EXCHANGE

WHAT Mi. FID MEANS FOR LJUBLJANA STOCK EXCHANGE? Jana Morela LL. M Management Board Adviser Ljubljana Stock Exchange 2 June 2007

LJSE today - in numbers Ø Market capitalisation of shares (31 th May 2007): Ø 16. 0 billion EUR Ø Average daily turnover with shares in Jan - May 2007: 819, 7 transactions, 6, 6 million EUR in shares Ø Official market ratios (as of 31 th May 2007): Ø P/E: 27, 5 Ø P/B: 2, 57 Ø Div. yield: 0, 99% 3

LJSE today - Market Structure OFFICIAL MARKET SEMI-OFFICIAL MARKET PRIME MARKET SHARES BONDS INVESTMENT FUNDS INVESTMENT BONDS FUNDS SHORT-TERM SECURITIES 4

CHANGING LANDSCAPE ON FINANCIAL MARKETS Ø New fragmentation and increased competition Ø Between exchanges Ø Exchanges, ATS, MTF’s Ø Members against exchanges Ø Disconnecting listing and trading services Ø Transparency Ø Full disclosure of market data Ø Full disclosure of regulated information Ø Higher standards for transparency of issuers Ø Regulatory barriers 5

CHANGING LANDSCAPE ON FINANCIAL MARKETS Ø Price discovery Ø Pre and post trade transparency Ø Best execution rule implemented on the side of the member Ø Internalization / concentration Ø Changing nature and role of regulators Ø Supervision and micro regulation Ø Providing services to all exchanges and markets Ø Driver of success or failure for national markets? Ø Explicit and implicit cost of regulation 6

EXPECTATION FROM THE STOCK EXCHANGE Ø Members Ø Ø More, better and diverse products Better liquidity Competitive pricing of services Price discovery Ø Issuers Ø Access to new investors Ø Improved investor relations Ø Maintaining relative importance and visibility Ø Investors Ø Ø More, better and diverse products Better liquidity Competitive pricing of services Membership structure 7

EXPECTATION FROM THE STOCK EXCHANGE Ø Shareholders of exchange Ø Value of shares Ø Long term competitiveness Ø Efficiency of operations Ø Regulator / Government Ø Ø Ø Regulatory compliance Surveillance of markets Efficient price discovery Stability of operations Efficient services 8

POTENTIAL REASONS TO MAINTAIN A LOCAL STOCK EXCHANGE Ø Domestic market is the ˝natural place˝ for most firms, but global ones Ø Flexibility to meet the needs of local firms and investors Ø Low cost trading systems are available now 9

TWO STEPS TO ACHIEVE GOALS: 2005 -2006: (by ourselfs) • Stronger role of the LJSE in the national economy • From quantity to quality • New products and services • Demutualization 2007 -2009: (with partners) • International competitiveness and full integration into EU capital markets with introduction of Mi. FID and EURO 10

PRIORITY PROJECTS for 2007 -2009 Ø Improved quality of the products and services: Ø Liquidity providers, Ø Automatic order routing, Ø Road shows, reporting and CG. Ø Projects to secure the central position of the LJSE on the domestic market in the post Mi. FID environment Ø LJSE as the prime venue for publishing information by issuers in Slovenia. Ø LJSE as the central storage of Regulated Information in Slovenia. 11

PRIORITY PROJECTS for 2007 -2009 Ø LJSE as the main provider of Market Data and Regulated Information from Slovenia. Ø Complete the range of products traded on the LJSE: Ø Alternative market for shares (MTF). Ø Full integration of the LJSE in the EU market place: Ø Remote members, foreign vendors, foreign investors, new indices, Ø Harmonization of Rules for listing, trading and reporting, Ø Competitive clearing and settlement of cross border trading, Ø New Europe as an investment destination. 12

THANK YOU FOR YOUR ATTENTION. http: //www. ljse. si Jana Morela, LL. M. Management Board Adviser Ljubljana Stock Exchange