Investor Guide
What is the capital market and what is the Exchange for?
The Exchange is an integral part of the capital market,
one of the most important elements of every healthy and
well-functioning economy. Two main groups of entities meet
at the capital markets:
Issuers enter the market in particular in order to
obtain financial resources for business development. One of
the options is to issue investment instruments.
One the other hand, investors with adequate financial
resources are interested in revaluing such resources through
a suitable investment.
That brings us to the fundamental role of the capital market
– the transfer of financial resources (capital) from
investors to issuers. In order to allow the fast and
effective transfer of capital with the support of enough
information, organisation is required. The Exchange fulfils
the role of the organiser. Therefore, the Exchange is a
place where supply of and demand for a given investment
instrument meet. The result of this encounter (trading) is
the definition of the price.
The Exchange, however, is not the only entity active on
the capital market. The Czech National Bank also plays a
unique role as the supervisory body. Together with the
Ministry of Finance it also creates rules for the operation
of the capital market.
How can I use the Exchange for trading?
Trades at the Exchange may only be made through Exchange
members, i.e. major banks and brokerage companies. If you
have decided to invest at the Exchange, it will be necessary
to conclude an investment services agreement with one of the
members, based on which the trading can be transacted. A
broker (an employee of the Exchange member) then submits
orders in the Exchange's trading system. The individual
trading orders may be submitted over the phone or
electronically via a computer. You can discuss communication
options directly with the relevant employee of the selected
Exchange member.
What can you invest in at the Exchange?
Currently, the Prague Stock Exchange offers trading of
the following securities:
These individual instruments differ from each other, and
they appeal by their nature to different types of investors.
By their combination, investments can be set up so that
profit and risk are in balance.
Naturally, before you invest, you should also think about
such other important matters as:
- your investment goals
- the approximate timeframe of your investments
- the permissible level of risk (or potential earnings)
- trying to get the most information possible about the
company you have decided to entrust your money to.
Information is important !
The most important factor for good investing is having
enough relevant information. Investors can get key
information in different ways. For example, it is possible
to secure access to data through well-known information
agencies that provide a broad spectrum of information about
capital markets, including returns from trading at the
Exchange. Another possibility is to get information directly
from the Exchange’s website, where information about trading
with a 15 minute delay, current buying and selling
quotations, statistical overviews and graphs are available.
Just like the Exchange, the majority of securities traders
also offer information services for investors. Daily
newspapers continue to be a traditional source of
information.