"We decided to launch a [free] market after calls from investors complaining they had hundreds of thousands of shares left in their securities' accounts but were virtually unable to trade them," said RM-S financial director Jan Springl.

For example, shares of Ceská sporitelna, earlier one of the most traded stocks on the Prague Stock Exchange (BCPP), left the official securities markets in the summer of 2002, following a decision of the bank's general board. It instead listed the stocks of Ceská sporitelna's principal owner, Erste Bank, on the BCPP in the fall of 2002. The opening of the RM-S free market gives Ceská sporitelna investors an opportunity to sell their stocks.

Despite the high-street bank being pushed off the trading floor on the official market, around 620,000 of its shares were scattered among several investors. The launch of the RM-S free market allowed Ceská sporitelna to get back into the market.

Ceská sporitelna is one of nine companies now traded on the RM-S free market. The other listed companies are Metrostav, Mittal Steel Ostrava, OKD, Tatra, Trinecké zelezárny, Vítkovice, Zdas and Zivnostenská banka.

In the first week of trading in early August, stocks of Mittal Steel Ostrava became the most traded securities on the RM-S. Deals involving Mittal Steel Ostrava's shares amounted to about 43 percent of overall trading volume of 10 million Kc ($400,000).

More companies will be added to the RM-S free market's trading in the short term, Springl said. "We've also encountered preliminary interest of other firms whose stocks stopped trading on the public stock markets," Springl said.

No striptease required

Getting listed on the new RM-S free market is simpler than on the official securities markets such as the RM-S or the BCPP because issuers are not required to regularly file financial results or buy out remaining shares when taking control of more than 90 percent of a company.

Though key company and securities data must be reported to investors, the issuer's approval is not needed for getting listed on the free market if its stocks have been traded on a public stock markets in the past.

"Many firms left the RM-S and Prague Stock Exchange over the past couple of years because they did not want to perform the required financial striptease for investors and competitors," Špringl pointed out.

The market could easily become a golden trading opportunity for thousands of small shareholders with stock certificates they received during the coupon privatization in the early 1990s.

Stakes of 1,491 state-controlled companies worth 299.4 billion Kč were distributed among the country's citizens in the first wave of coupon privatization in 1992. In the second round, which ended in 1994, assets of 861 companies worth 155 billion Czechoslovak crowns were privatized.

In the early 1990s around 7 million people became shareholders by placing their privatization coupons in selected companies or investment funds. As a result, in terms of the number of shareholders in a country, the Czech Republic was at the top of the list. Later many investors sold their holdings acquired through coupon privatization.

Today the Czech Republic, with some 2.5 million shareholders, still ranks near the top among countries with the highest number of investors per capita. However, many of the shares these investors held from the coupon privatization era became virtually untradable because their issuers either left the stock markets or were pushed out.

In a drive to clean up the legacy of coupon privatization, the government in 2001 removed hundreds of infrequently traded stocks from the public stock markets. The newly opened RM-S free market could pull some of those companies back into the market. Furthermore, it could contribute to an overall rise of stock trading in the country.