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BCPP launches an online simulator

New Web site is geared toward attracting and educating small investors

By František Bouc
Staff Writer, The Prague Post
March 14th, 2007 issue

The Prague Stock Exchange (BCPP) took another step to increase its appeal, launching a Web site in late February where small investors can learn about exchange products and practice trading.

The simulator should build awareness, especially for the financial derivatives the BCPP introduced in October. The site (www.px.cz) also provides a glossary of products and guidelines about how to trade on the Czech market.
“Our main ambition was to introduce the new products in a very comprehensive way,” BCPP spokesman Jiří Kovařík said. “And we’ve received positive responses to both the derivatives and the Web site.”
In the first week, it attracted some 5,000 visitors. The number of hits is now 750–800 per week, Kovařík said.
Trading with derivatives, including futures, investment certificates and warrants, is skyrocketing, Kovařík said.
“When we introduced futures last October, we recorded just four trades in the first month,” he added. “In the following month, there were tens of futures trades. Within the next month, the volume had risen to hundreds of trades.”
The simulator isn’t expected to bring a dramatic rise in real trades. Its main goal is educational: to extend small investors’ comprehension and comfort zones.
Many learn that, while traditional stocks generate profit when they go up, derivatives allow investors to speculate on positive or negative developments.
Kovařík admitted the original campaign was insufficient.
“After the launch of the futures, stockbrokers were telling us, ‘It’s great that you expanded investors’ opportunities, but you better tell them what the futures actually are.’ ”
Cyrrus broker Marie Kolovratová said the BCPP and brokers have developed campaigns for small investors as well, including brochures with guidelines and cooperation with groups and seminars.
While calling the simulator’s launch positive, she added information on the site is still too general.
“The Web page provides a general explanation, but it should go more in depth in specifying particular features and certificates of derivatives,” she said, “such as how their value has developed in correlation to the value of underlying assets.”
Attracting small investors has been a goal of the BCPP, Kovařík said, because “small investors are an indispensable group for any stock market.”
Such investors’ share of BCPP trading was 2 percent four years ago, but now it’s 21 percent, Kovařík said, adding that those numbers should grow further.
“When you take a look at other regional stock markets such as that in Poland or Austria, you see that small investors form a much bigger group of traders than in Prague,” he said. “Small investors represent a tremendous business potential for the stock exchange and we will do all we can to bring them to the market.”

František Bouc can be reached at fbouc@praguepost.com


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