Warsaw Stock Exchange to open innovative rating agency

The Warsaw Stock Exchange (WSE) plans to open a rating agency this year as part of a wider push to secure Warsaw’s place as the preeminent center for regional capital markets, as well as to ease access to funding for Polish companies and increase transparency on the market.

 “For the last couple of months we have been working intensely on forming a new rating agency, which will oversee the needs of Polish investors and bond issuers,” BondSpot SA board president Jacek Fotek told Polish daily Gazeta Wyborcza. “The institution will be an independent body and we want it open as soon as possible.”

The structure of the new agency will build on lessons from the 2008 financial crisis and what many regulators see as the potential conflict of interest at the heart of the standard rating agency model. Standard & Poor’s, Moody’s and Fitch take their fees directly from issuers, whereas the new rating agency will have the WSE as an intermediary.

“The issuer will not approach the agency directly, rather through the WSE as an intermediary. The WSE will then commission the agency to conduct a rating,” explains Prof. Leszek Pawlowicz. “Under this model we will break the direct relationship between the company being rated and the rating agency – there will be no financial connection.”

The WSE also hopes to make the new rating agency competitive from a number of perspectives. It will offer ratings at prices relative to the size of the bond issue, which will mean lower prices for most Polish issuers. The agency will also be headquartered in Warsaw, rather than London or New York.

“We want the new agency registered in July,” said Prof. Pawlowicz, president of the WSE supervisory board. “We will announce it at the European Financial Congress in Sopot towards the end of June. We will then apply to the European Securities and Markets Commission to register the new agency.”