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Czech News in English » Opinion » One man's stock market

One man’s stock market

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The Prague Stock Exchange (BCPP) will be, according to a series of articles in the media, experiencing a revolution at the end of next week. The new owner will modernise the technology used for trading (called SPAD) and bring in American banks.

In reality, there are even more important things happening at the stock exchange. Let us look at the web pages of Patria Finance.

They writes that BCPP in February traded stocks worth CZK 40 billion. Of that Patria traded CZK 30 billion in February. That is 75% of the entire volume. I think these are facts worth thinking about. It’s not just about the skilfulness and success of one trader, but it could endanger trade on the market. The keeping of certain regulations that ensure a real market no de facto rests in the hands of one trader on the BCPP.

We are not saying that Patria did something wrong (it, in fact, boasts about this on its web site). Maybe it’s just better than the others. But it is probable that no other similar stock exchange, operated by a single trader exists in the world. It would be interesting to see what the antimonopoly office will have anything to say about it. Probably not. The stock exchange may be a public service, but it is operated by a private company. Another specific characteristic of the BCPP is that a significant majority of the trade each month – CZK 20.6 billion – has to do with ČEZ shares, and the state is continuously increasing its share in that company.

The popular magazine Wired, which deals with the world of the internet and information technology ran an interesting article about the brilliant mathematical formula that caused the financial crisis. It was written by a mathematician of Chinese origin, David X. Li. Until recently, he was considered to be a promising candidate for the Nobel prize, an award gained by number of financial economist. Li invented a formula that was to limit the risk in bond trading. You could say that Li is one of the key players responsible for the fall of Lehman Brothers. This is the famous equation:


Gausian Copula

The arrival of Petr Zahradník from Česká spořitelna’s European office to the National Economic Council (NERV) is good news. Zahradník is the expert on the European Union in the Czech Republic. He knows every rule, directive and regulation by heart. It’s not an exaggeration to call his relationship to the details of European directives passionate. And this is very useful.
But still, Petr sure has a strange sort of fun. He probably knows it. But what can be better than when you get to combine your hobby with your job?

Does it sound seem to you that I am not writing about the privatisation of of ČSA as much_ As if the government finally realised that privatising companies in the thick of the deepest global crisis in the last 80 years makes no sense? The reality is that Aeroflot has the biggest chance has to do with the fact that things go on sale when the market is down.

Translated with permission by the Prague Daily Monitor.

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