Gielda Papierow Wartosciowych w Warszawie SA

WSE:GPW

Earnings Call Transcript 2021-Q4

[Operator]

Pawel, please go ahead.

[Pawel Wieprzowski, analyst]

Good afternoon, ladies and gentlemen. My name is Pawel Wieprzowski. On behalf of Wood & Company, I am pleased to welcome you to the fourth quarter conference call with the management Board of the Warsaw Stock Exchange.

Today, the company is represented by Mr. Marek Dietl, President of the Management Board; Izabela Olszewska, Member of the Management Board; Piotr Borowski, Member of the Management Board; Adam Mlodkowski, Vice President of the Management Board of the Polish Power Exchange; as well as Piotr Kajczuk, Finance Director.

Gentlemen, the floor is yours.

[Marek Dietl, executive]

Good morning, good afternoon and good evening wherever you are. Welcome to the -- to our investors call. It is my great privilege that I can present you the results for the fifth time. And I would like to start with a look back at what the past 5 years. And so we divided last 20 years into 4, 5 years period, and we counted up the -- I think most important parameter for every investor is net profit.

And we can see that back 20 years ago, we had like PLN 240 million, [ loss ] of PLN 48 million per year, or PLN 240 million for 5 years' time. Then we had another period with the average profit per year of PLN 160 million and then a period of similar sized profit of PLN 112 million. And the last 5 years were actually quite nice as the net -- average net profit, including this year was PLN 155 million . So the company really progressed in the -- in its profitability. And the number of shares is constant, so the earnings per share are 3x higher than it used to be 20 years ago.

So after this historical remarks, let me move to the -- to this year milestones and, most important, achievement. So last year was marked by quite a decent number of IPOs, I wouldn't say global phenomena, by the way. We are not only venue in the world, which enjoyed quite a sizable number of newcomers. We had also a nice growth of trading volumes for our electronic order book and also of trading of electricity and gas.

We also managed to complete some of our strategic projects last year. We have fully running agriculture market now. We have first piece of our -- first 2 pieces of our technology is ready, the TCA tool, and GPW STORK as a surveillance system. And also our Indexator -- index calculating tool, what is particularly important for our index factory, what I would refer to it later.

We are almost done with our GPW Data project, which is focused on XBRL technology. We are very close also with GlobalConnect, so giving access to local investors for the global equities. We are really completing the acquisition of Armenian Stock Exchange. We also progressed very nicely in our private markets of blockchain distributed ledger technology. This year, we're going to start with the first trading of first [ tokens ] as it will be tokens on fine arts.

We also developed GRC software for our issuers and, of course, for ourselves as well and for other companies. It's a great interest. That software is not ready yet, but there's already a queue of potential clients who are ready to sign the agreement. So first module who will deploy this year.

We're also progressing in our Trading Platforms, WATS for equities and for bonds and for the energy, actually merged this bond trading system and equity trading systems. So they are now developed parallel, a smart system with multi-asset functionality. We are less advanced in securities lending platform as we came across important regulatory constraint.

And we -- and last year, we also started Polish digital logistics platform and dynamically inserted [ it's ] platform for regional television. So it's called telematic operator. And we started a process of building up a clearinghouse for equities to international, well, together with our Hungarian partners.

I move to the right-hand side of the slide. And here, you can see some of our core business activities last year. So we extended the Analytical Coverage Support Programme, version 3.0, so more and more companies are covered by the analysts, and we sponsored that. We also help our brokers with technology support program where we give discounts for those who are advancing their technologies.

And we also supported IPOs, we have this [indiscernible] programme, GPW Growth, which is -- we have further addition running, and it's always fully subscribed. So we have a full set of students there. And we had -- out of this student group, we had the first IPO already. And we also simplified extremely listing procedures on a regulated market together with the brokers and depository.

We are more and more advanced in the structured products. So we have 2,500 of them. We have also new ETFs on our market. So the product offering is much, much broader. We also -- we are also engaging the promoting and building up the market, like we are involved in capital market development strategy run by the Polish government.

We have Three Seas Stock exchange initiatives together, and we incorporate with the stock exchanges from the region, but also with EBRD. And we hold a number of conferences like Innovation Day, Gaming on the Exchange, Business in the Genes, it's about biotechnology.

One of our key focus for the last year was the ESG thing. So when we updated our best practices to comply with highest ESG standards, we have published the -- we developed and published together with EBRD ESG reporting guidelines for our issuers. We also published guidelines for the integrated reporting. We had also kind of competition for ESG leaders to make it -- to gain momentum for the issuers and to price those who are performing best in the ESG space. And ourselves, we also developed our ESG strategy until 2025 to -- first of all, we wanted to have this strategy and to show our ESG phase, but also we want to show the best practice for other issuers.

At TGE and our Polish Power Exchange we had, as I mentioned, this agriculture market, fully running. So we built up an agriculture market council to have a contact with the market participants and to improve our -- the usage experience. We also launched a kind of training platform where people can learn how to trade on our agriculture market.

Our GPW Benchmark, as I mentioned, we have a technology now, which allows us to do kind of a index factory. So we have plenty of new indices and we can also build customized indices. So we broaden our customer base for that. And we also work on alternative interest rate benchmarks and Interest-rate Benchmarks Congress was organized by us. So we are really in the center of competence for Poland when it comes to indices and benchmarks.

So I would like to leave the floor to Izabela and Piotr now for a presentation of our key financial results. So thank you for now.

[Izabela Olszewska, executive]

Thank you, Marek. Hello to everyone. In my part of the presentation, I would like to guide you through the business elements of the financial market in more details.

And looking at the trading volumes on our equity market on the Main Market in the fourth quarter of the 2021, we can say that it was a really good quarter. However, a little bit worse than the quarter -- the fourth quarter of 2020. But we should remember that the last quarter of 2020 had extremely heavy trading. It was a period where in October, we had debut of Allegro company, the second debut in the whole Europe in terms of IPO value.

And a lot of investors that were interested in this company and this was the result of heavy trading in the shares of Allegro. Plus in December, the heavy trading was connected with other companies our blue chip index, CD PROJEKT, and it was connected with some news around this company and its game. This is the company from gaming sector.

Main Market -- on the Main Market, electronic order book turnover value in the whole 2021 exceeded the turnover value from 2020 by 5.5%. And there are several factors that positively influenced the trading volumes in the previous year.

First of all, I'd like to mention new clients. So we managed to connect -- to gain and connect some new local and remote exchange members. And a couple of our exchange members decided to expand their activity to new segments and products. Also, I would like to underline the -- our new contracts with independent software vendors and external administrators. It is very important for us because these guys, they offer a connection to the market -- to the group of potential clients. And through them, we can reach this group of the clients and we can encourage them to be active on our market.

As our CEO has just said, this was the year of -- with many IPOs and the debuts of companies on our bond markets. But on the Main Market, we had 16 new companies, including the biggest IPO in 2020 (sic) [ 2021 ] Pepco company from commerce sector.

Also, I just want to mention inflow of the fresh capital to equity funds. It was connected with the inflation pressure in our country. And some of our citizens, they also decided to allocate their some of the capital to the equity funds.

Plus the high activity of our retail clients, this is, I would say, currently the trend and also active foreign clients. So just to give you the overview of the structure of our trading, the local institutional, they generated 21% of the trading volume and retail clients, 22% and foreign 57%.

And as far as the NewConnect market is concerned, so this is our SME platform. So the trading volumes were roughly back to the pre-pandemic values. And I would like to mention 2 factors of such situation. So first of all, the year 2020 was specific in that sense that the pandemic sparked interest of investors into culture, [indiscernible] companies from sectors like technology, gaming and also health care sector.

And the second reason is that the NewConnect is a natural kindergarten for the companies. And those who -- which are the biggest in the NewConnect and the multi- [indiscernible] they decide to be transferred to the Main Market. So we had 4 transfers from NewConnect to the Main Market. And of course, as I mentioned, it is, I would say, desired phenomenon and it is very natural, but this is the reason of decreasing turnover on the NewConnect.

Looking at our other product lines. So we can say that there was, in 2021, the increased interest of our investors in structured products. And the number of ETP across the 2,400 different products. We have 6 issuers of these products, and the most popular structured products that were those based on German DAX index.

Also as our CEO said, the ETF offer expanded in 2021, way for new firms based on 2 foreign indices, S&P 500 and NASDAQ 100. And also to our indices from WIG family, it is sWIG80 total retail index and fixed tax total return. So positive investment in our view becomes more and more popular in Poland.

And the trading volumes, they slightly dropped year-on-year, but it was connected also with some specific of 2020 years where the ETFs based WIG20 short. This ETF was very popular while market was bullish and short products allowed to earn on bullish market. The liquidity is supported by market makers, but also by the liquidity providers, which operates within the HVP, HVF programs. And their share in equity turnover increased up to 15% in the fourth quarter of 2021.

Could you please -- okay. The next slide. Okay. So the next slide is dedicated to derivatives market. And on derivatives market, we had a growth of trading volumes year-on-year. But the structure of trading change and the trading volumes on our flagship product, future based on blue chip, WIG20 index dropped. And it's because of the lower volatility on the equity market. You can see the graph on your left-hand side in the bottom.

And the trading volumes on currency futures increased significantly. It was the, I'll say, the top future product -- or group of future products because we have various currency pairs as the underlying for futures. So this was the year of -- 2021 was the year of currency futures, we can say. The liquidity is also supported by market makers, plus our active HVP program.

The next slide, please. This is about ESG, and we treat ESG as an integral part of the business because ESG reporting is strongly expected and I would say now demanded by analysts and shareholders. So it is why we treat it as a part of our business. In the end of the previous year 2021, the Warsaw Stock Exchange published the ESG strategy until 2025 where we presented our goals and ambitions in -- based on 3 pillars. So environment and climate, employees society and governance.

What I would like to underline here is our ambition related to the reduction of greenhouse gas emissions by 50% by the end of 2025 in Scope 1 and Scope 2. And we want to become emission-neutral by 2030. And of course, we also include the Scope 3 in our climate policy. However, collecting and processing data is more difficult for Scope 3. So we have decided to begin from -- reporting Scope 1 and Scope 2, and the indicators will be included in our integrated report this year. But of course, also this year will be the first one when we start to collect the data for Scope 3 reporting.

The whole capital group, all our companies, they are involved in ESG strategy implementation. And we are just preparing the annual operational plans for every company. As I mentioned, the first reporting related with the new strategy will take place together with the publishing of our integrated report this year. And we are going to report based on the highest standards or GRI standards. And also we will be -- we will base our reporting on the guidelines, which we prepared together with EBRD.

The next slide, please. And here, we would like to underline that Warsaw Stock Exchange is also involved in supporting the other market participants in adoption to ESG. So we are active in this area. So our CEO already mentioned some our activities like the Code of Best Practice 2021, which also includes ESG factors and our guidelines prepared together with EBRD.

We take part in various events and also we -- in competition related to ESG. But what is very interesting, we promote green bonds on our market. And together with the International Finance Corporation, we offered the special program to support the issuance of green bonds.

So in the first addition, 3 companies from Poland -- the winners will be offered support in drafting issue documentation. And also they will receive -- they have covered the cost of obtaining of green certificate. So we plan further additions and we hope that very soon, we'll have more and more green bonds listed on our platform in Warsaw.

So thank you very much. And yes, Piotr, the floor is yours now.

[Piotr Borowski, executive]

Thank you, Izabela. So now we talk about the financial results. It was worth mentioning that the fourth quarter of the last year was -- let's say, less successful compared to the last quarter of '20 because the sales revenue was down by 7.6%. It was mainly due to the lower activities of investors on the financial market, and it was combined with the higher revenues on the commodity market. But if you look on the total 2021, we had a record high revenues at the level of PLN 407.6 million. So very successful year from this point of view.

Operating expenses in the fourth quarter were up by 13.1%. While in the whole '21 year, they were up by 11.3%. And this increase was mainly driven by the higher external services expenses and employee costs.

EBITDA in the fourth quarter was down by 15.6%. While for the total year, it was lower by 4.6%. What is also very important for us, and we are very proud of it, that the net profit for the whole 2021 was up by 5.9%, and it was the record high in the history of the exchange. It was only 1 year that the net profit was higher in 2018. But in this year, we had a one-off big profit because we sold our stakes in [indiscernible] Exchange. But without this one-off, the last year was the best in the terms of the net profit.

The next slide, please. The EBITDA margin for the fourth quarter of the last year was at the level of 51.3%, and the net profit margin was 38.5%.

Next slide, please. As we said before, the financial market was doing slightly worse compared with 2020. So the trading revenue on the financial market was down by 17.4% in the last quarter of the -- last year, it was connected with the lower value of trading and lower average transaction value. And also there was a different structure of investors. The participation of the retail was lower, and they resulted in a lower average fee on the stock market.

The next slide, listing revenue. For the fourth quarter, it was down 29.5% year-on-year. But in fact, for the whole year, it was higher by 6.4%. In the fourth quarter of the last year, there was, as you can see, the lower introduction fee. Normally, it is the level above PLN 1 million. It is only PLN 0.1 million in the fourth quarter, but it was a one-off event.

With this technical accounting, we changed the accounting rules for the introduction fee for bonds. And this was the one-off result of this change in the fourth quarter. So in the next quarters, you can expect the introduction fee at the level above PLN 1 million.

From this perspective, the last year was very successful because we had altogether 16 new listings on the Main Market and 32 new listings on NewConnect. So it was a very vibrant primary market and listing market in Warsaw.

The next slide. We have a constant growth of our market data revenues. In the fourth quarter, it was higher by 6.2% year-on-year. And we acquire new clients for our products, so Warsaw Stock Exchange product but also for the commodity market and GPW Benchmark. So we are very glad with this diversification. And in the fourth quarter, we had a record number of data subscribers. So it was a very good year from this perspective.

Now I'm handing over to Adam Mlodkowski, Board Member of Commodity Exchange.

[Adam Mlodkowski, executive]

Thank you, Piotr. Hello, everyone. Adam Mlodkowski from TGE speaking. I would like to present you a short information about the results on commodity market in Q4 2021.

Total electricity turnover in Q4 '21 was 61.8 terawatt hour. It means an increase 1.8% year-over-year and a decrease 0.6% quarter-on-quarter. The spot turnover volume was 8.5 terawatt hours, and the forward turnover volume was 53.3 terawatt hours.

Finally, total electricity turnover in 2021 was 225.2 terawatt hours. It means a decrease 7.4% year-over-year, but I would like to underline that the turnover on the spot market was the best in TGE's history.

On the gas market, total turnover in Q4 '21 was 43.2 terawatt hours. It means an increase 7.4% year-over-year and a decrease 2.6% quarter-on-quarter. The spot turnover volume was 8 terawatt hours, and forward turnover was 35.2 terawatt hours. So total gas turnover in 2021 was 108 -- 180.8 terawatt hours. It means a decrease, 19.6% year-over-year. And it was also like on the spot electricity market, the whole gas -- the whole turnover on the gas market was the best yearly result in the history of our exchange.

The green certificate markets property rights turnover in Q4 '21 was 7 terawatt hour. It means an increase 10.6% year-over-year and an increase 55.1% quarter-on-quarter. On energy efficiency property rights turnover in Q4 was 26.6 kiloton. It means almost 9% decrease year-over-year and 32% increase quarter-on-quarter.

In the last year, our RSE (sic) [ RES ] property right turnover volume was 25.9 terawatt hours, is a decrease 4% year-over-year, and energy efficiency property rights turnover volume was 108 kiloton. It means 43.5% decrease year-over-year.

The next slide, please. Revenue from the electricity gas and property rights market, we noted an increase from trade in electricity in Q4 '21 to PLN 5.4 million. It means an increase 1.6% year-over-year. And we also noted an increase of revenue from trade in gas in Q4 '21. revenues from this business line was PLN 3.6 million. It was 5% higher than Q4 2020.

The TGE Group achieved also an increase of revenue from trade and property rights to PLN 6.8 million by 11.6% year-over-year. And our revenue from other fees paid by market participants was PLN 4.4 million. It means a significant increase year-over-year by 33.2%.

The next slide, please, the last one for my presentation. Revenues from -- clearing revenues from this activity increased in Q4 '21 to PLN 13.9 million from PLN 12.3 million in Q3 '21, means an increase 9.6% year-over-year. It was driven mainly by an increase of turnover in RES property rights. Revenues from the operation of the register of Certification of Origin in Q4 '21 increased to PLN 5.6 million. This is plus 1.4% year-over-year, and it was also driven by an increase in segments related to green certificate and Guarantees of Origin.

That's all about commodity market. Thank you for your attention.

[Piotr Borowski, executive]

Thank you, Adam. Thank you very much, Adam. So we are coming back to the financial information about our capital group. Operating expenses were up by 13.1% in the fourth quarter year-on-year and was mainly due to the higher total employee costs.

The employee costs increased because we invite new headcount in our strategic projects. We started 2 big strategic projects in the fourth quarter, one is [indiscernible] on the media market and the next one is logistic operator in the transportation area. So we have new people in these 2 projects that resulted in higher employee costs.

Also, the external services were higher, and this increase was driven by higher advisory costs in our strategic projects and also by the higher cost of promotion and market development. We also organized some events -- marketing events connected with the 30th anniversary of the Warsaw Stock Exchange. General operating expenses in the total '21 year increased by 11.3% year-on-year.

Next slide, please. Share of profit of entities measured by the equity method in fourth quarter '21. As every quarter, there was a solid participation of revenues by our subsidiary -- national depository securities group. It was in the fourth quarter. The participation was higher by 8.7%.

And as we had many questions concerning this company national securities depository business, please notice that we attached the additional slide in our presentation. It is Slide 25 with account statement of the national depository and the main business line. So you can check this result of the KDPW for the last and for the '22 year and the main business financial information about this company.

The next slide, please. Our consolidated financial statement, it's worth mentioning that we paid dividends in August last year at the level of PLN 104.9 million, which was PLN 2.5 per share. And also, at the beginning of this year, in January, we buy back -- well, in fact, there was maturing of [ 1 series ] of our bonds. So we bought PLN 120 million our bonds from investors and the next series of our bonds will be measured in October this year, and we are not planning to roll it out. So we will buy this bond from the investors.

So it was the last slide in our presentation. Thank you.

[Operator]

Thank you very much. We will now be moving to the Q&A part of the call. [Operator Instructions]

[Pawel Wieprzowski, analyst]

If there are no questions -- yes? May I?

[Operator]

Yes. Perhaps if you have no any questions, please go ahead, Pawel, with a couple that you have.

[Pawel Wieprzowski, analyst]

Perfect. Gentlemen, thank you so much for the presentation and insights into the fourth quarter results. I have a couple of questions. First of all, probably one of the key elements of your equity story is the dividend and the strategy ends this year. So how will you approach the dividend policy going forward? Because until this year, you've been paying gradually increasing dividend per share. That's up PLN 0.1 per share every single year. So it's roughly 5% growth year-on-year in dividend per share. Do you think this will be the approach to your new dividend policy in the new strategy?

[Marek Dietl, executive]

Thank you, Pawel, for this question. We are just about to hire global consulting company for our strategy review and preparation for the strategy beyond 2023. So we don't know yet what will be the dividend strategy. Of course, we have to integrate the dividend strategy into our overall corporate strategy. Our investors have been quite pleased with our, let's say, stable dividend policy. So the new upfront what the dividend will be.

When we were planning the dividend level, we have not expected so strong cash flow. And this cash flow is driven, on the one hand, from the very good operational performance, but also from the much lower CapEx than we expected for our strategy as we raised overall EUR 50 million in 3 grants. Actually, we -- by this amount, our CapEx is lower than we expected back in 2018.

So combining this lower CapEx, no [ ammunition ] until now and our small ones looking forward, there might be advice from our consultants to increase the dividend. But the model, I presume, will be the same. So gradually, we're going to increase our dividend. And maybe this delta -- the change in dividend will be different due to our strong cash flow situation, I don't know.

For this year, it's well defined that we stick to our minimum dividend level and for the future guidance, I don't know, it will be a part of our strategy.

[Pawel Wieprzowski, analyst]

Sure. Fair enough. My next question concerns, I guess, one of the most promising of your strategic initiatives, i.e., GlobalConnect. So do you have any kind of considerations when this project can be launched? And how many foreign shares are you planning to add to your offer?

[Marek Dietl, executive]

Izabela, if I can ask you to elaborate on this question. Thank you.

[Izabela Olszewska, executive]

Yes. Sure. So at the moment, we have a correspondence with the Polish FSA. And it is related to the certain organizational issues of the market. So our goal is to launch the market within 2 months from the greenlight received Polish FSA. So as we have informed earlier, we -- as exchange, we are ready with everything to the market launch. However, we have external partner like market makers and the brokers who will offer this market to their clients. And for us, it's very important that they have all the rules -- final rules and final model of the market. So this is why we need to wait for Polish FSA and for the greenlight.

And with our GlobalConnect, we follow the examples of similar markets in Europe, like the market in Austria or in Germany. And let's take the example of Austria. So they started in 2017, and currently, they got 800 IPs. So the -- 800 companies, foreign companies and their shares are traded on their foreign market. So in our assumptions, we are going to start with a few companies, few items because it will be a kind of pilot period test for all market participants in a real environment.

And then we think that we can have several dozen items, just corporates, I think up to 30 by the end of this year. And then we expect that the number of companies will extend relatively quickly. So just I consulted it with the -- with our partner and the market maker and the future market maker, and we think that several hundreds of companies -- it is the number possible by the end of 2024.

So this is -- of course, there are the estimation. But looking at the history of other markets and also the assumption is that it will be fully automated process. So I think that adding the new companies, it will be relatively easy.

[Pawel Wieprzowski, analyst]

Before I proceed with my next question, I see that we have a question from one of the call participants. So I'll permit myself to just read it. What are your plans for the maturing debt? Are you looking to refinance it?

[Piotr Borowski, executive]

So, Pawel, we already mentioned, we have a very good cash position. We have plenty of cash on our balance sheet. So in fact, we are not planning to issue additional bonds. And no, we are not going to refinance these [ bonds], yes.

[Pawel Wieprzowski, analyst]

Okay. I think this answers this question. So could you please elaborate a bit about your acquisition plans as far as the Armenian Stock Exchange is concerned? Any kind of update on this front?

[Marek Dietl, executive]

Well, when it comes to the whole documentation and due diligence, everything is done. It requires a final decision of signing. But in the current -- under current circumstance, it's very difficult to travel to close the deal. So we are ready, but it's not completed yet since the priorities are now, of course, operational business, but also helping out Ukrainians.

We have, for example, recently initiated kind of incubation projects for Ukrainian start-ups from the fintech space. So we are quite busy at the moment with some extra work. So that's why the deal has not been concluded yet.

[Pawel Wieprzowski, analyst]

Okay. Perfect. Two interconnected questions. The first one, could you please provide us with your OpEx and CapEx guidance for this year? And since the -- I assume that they will be quite inflated amid the introduction and implementation of several strategic initiatives, could you please provide us with your consideration regarding revenues from these strategic initiatives this year?

[Marek Dietl, executive]

So I will start with the revenue side, and then I will ask Piotr, our CFO, to elaborate on the OpEx and CapEx. So revenues -- few millions already sitting in the results from the last year, but still below our expectations. This year, we hope for crossing the margin barrier of PLN 10 million. So some junior 10, 11, 12 would be a great achievement.

When it comes to the completely new strategic initiatives, as we call it self-diversification, we were very successful in the last few years in our core business. So we improved our core business level. It's also part of our strategy, and we are very successful in defending our market position.

I remember back in 2018, our share in the trading of the Polish stocks went down to below 70%, and now it's over 90%. So we're happy with that. And generally the quality of our order book has improved in the recent years. But our diversification efforts, of course, pandemic then war, it is a little bit tricky, gaining new clients for new products if you cannot fly over to them and so on. So we are underachieving in that respect, but we hope to rebound this in the following years.

And Piotr, over to you regarding CapEx and OpEx.

[Piotr Borowski, executive]

Yes. Thanks. We are planning CapEx at the level of PLN 50 million, maximum PLN 55 million, and 60% of this CapEx will be connected to a new business projects. Regarding OpEx, we expect that it will be higher than for the last year, but maximally 15% higher than for the last year -- maximum 15%.

[Pawel Wieprzowski, analyst]

So it seems that this will be the year with the highest OpEx and CapEx. And later on, we should expect CapEx dropping and OpEx probably flattening rather, right?

[Piotr Borowski, executive]

Yes.

[Pawel Wieprzowski, analyst]

Yes. Please go ahead. Go ahead.

[Piotr Borowski, executive]

We expect, as our CEO said, from these 2 big projects, revenue from the logistic operator this year and from the [indiscernible] next year, several million in revenues.

[Pawel Wieprzowski, analyst]

What are considerations regarding the IPO pipeline for this year?

[Marek Dietl, executive]

So Iza, if you can take over that.

[Izabela Olszewska, executive]

Okay. So of course, the environment, I would say, it's very demanding and showing that there'll be nothing just more negative, I would say. So we have some estimation and -- related to IPO pipeline. And it was, of course, connected. We've -- first of all, the number of prospectus, waiting for approval with Polish Security Commission, and there are 11 companies with the prospectus in FSA.

And this is the one figure. And then, of course, we have some other meetings with the interesting companies, and they are just in the process of election of their advisers and prospectus preparations. So also taking into account the 2 debuts, which happened already in 2022. So we can say that altogether, we can expect somehow a dozen debuts on the Main Market. But we have also SME platform, NewConnect. And here, we had 5 debuts this year.

And according to our best knowledge, we can expect just from 15 up to 20 something or even 30 debuts this year. But of course, assumption is that we will not have -- even worse situation with the war and pandemic and all this stuff. So as for today, we are quite, I think, optimistic or realistic about IPO market.

[Pawel Wieprzowski, analyst]

Okay, splendid. So let's keep our fingers crossed for the optimistic scenario, 30 new names trading at the Warsaw Stock Exchange. We have one more question coming from our chat. Maybe I'll just read it. What is the updated share of investors in trading shares on the main and futures market?

[Marek Dietl, executive]

Iza, if you can take that.

[Izabela Olszewska, executive]

So just I think the, yes, it was probably a part of the presentation of -- my part of the presentation. But I will -- of course, I will repeat it. So on the equity market. In the Main Market, the foreign investors, they generated 57% of the trading volumes. Retail clients 22% and local institutional 21%.

On derivatives, it is a little bit different. Just a moment. I will check it if I have it. Yes. Just maybe on the -- yes. Okay. So in case of futures contracts, so we have foreign investors they generated 27%. And individuals, so retail clients, 32% and institutional 41%. This structure has been changing in the direction that there is a smaller percentage for retail clients and higher for institutional clients.

But I would like to underline one thing that within the institutional part, we include also market makers and the participants of our liquidity program. So it is why it is growing because we have active liquidity providers on our derivatives.

[Pawel Wieprzowski, analyst]

Perfect. It's a very detailed answer, indeed. So concluding question from my side. So Poland proved to be now half of the emerging market Europe following Russia's exclusion from the MSCI emerging market's universe. So now Poland is something like 45%, 46% of the MSCI emerging Europe index. So do you think that we can absorb given the significant liquidity of the Warsaw Stock Exchange part of the trades that were done in Russian stocks? So can -- do you think that holding Polish stocks may serve as a proxy trades for Russian stocks? And have you heard about any potential investors leaving our region because of the Russia's demotion from the emerging market index?

[Marek Dietl, executive]

Quite tricky and complex question. Maybe, Iza, you will be able to handle it.

[Izabela Olszewska, executive]

Yes. So let me start from the second one. So to be honest, we haven't heard, and I hope that it will not happen. But of course, we are in everyday contacts with our clients. But currently, there is no such signs from their side.

And related to the first part of your question, so because of removing Russia from MSCI indices, so that's true that the share of Poland increased in 3 main indices. So emerging market euro, MSCI emerging markets euro and Africa and emerging market [ world ]. But it is not the typical rebalancing. And for a rebalance to happen, in my view, the question is whether money currently invested in Russia would be able to leave. And the Russian stock market has been closed since [ 25th ] of February. And plus, Russia's Central Bank just -- has ordered brokers not to execute the sale orders from foreign shareholders. Plus, there is also a ban on Western companies taking money out of the country.

So at this moment, is -- in my view, it is unclear how the funds, especially passive funds, would be able to save their shares and get their money back. And I think that without the liquidation of their position, there is very likely to be no rebalance flows across the rest of emerging markets. However, I think that this change in MSCI emerging markets could have potential -- a positive effect for Poland. But in the future, when there will be the new flows to discounts. So then, of course, it is a significant increase of share of Poland, especially in emerging markets, Europe index.

[Pawel Wieprzowski, analyst]

Perfect. So let's keep our fingers crossed for higher inflows in the Polish stock market. It seems that we don't have any further questions, at least I don't see any. So I believe we can conclude the call.

Gentlemen, thank you so much for delivering the presentation. Let's keep our fingers crossed for strong volumes this year. And I'll speak to you soon after the first quarter results. Have a great weekend. Stay safe. Take care.

[Marek Dietl, executive]

Thank you.

[Adam Mlodkowski, executive]

Thank you very much.

[Izabela Olszewska, executive]

Thank you. Bye.

[Marek Dietl, executive]

Bye-bye.

[Piotr Borowski, executive]

Bye.

[Operator]

Thank you very much. This concludes today's call. We'll now be closing all the lines. Thank you. Goodbye.