- Stocks trading at an average price under PLN 0.10 in the last quarter will be put on the Alert List (previously: PLN 0.50)
- Stocks trading at a low liquidity level will be put in the Lower Liquidity Zone, i.e., when the number of transactions in a stock is less than five transactions per trading session at more than one half of all trading sessions in the quarter preceding the periodic verification
- The objective of the modifications is to improve the transparency of rules applicable to stocks trading at a low liquidity level and penny stocks and to align the rules with the new tick sizes
- The new rules apply as of the periodic verification of stocks which will take place at the end of Q1 2020
The Management Board of the Warsaw Stock Exchange (GPW) has modified the rules of classification of stocks on the Alert List and in the Lower Liquidity Zone. The decision to lower the penny stock threshold of the Alert List follows mainly from the introduction of new tick sizes as of 4 March 2019 which allow for the listing of financial instruments with a precision of four decimal places.
The Exchange has also decided to modify the definition of low liquidity level which is a criterion of classification in the Lower Liquidity Zone. According to the new rules, a low liquidity level is when the number of transactions in a stock is less than five transactions per trading session at more than one half of all trading sessions in three calendar months preceding the periodic verification (including the month of the periodic verification, excluding the last three trading days of that month). Issuers of stocks trading at a low liquidity level can still join the Liquidity Support Programme.
“As previously announced, the Exchange has completed a comprehensive analysis of the impact of the new tick sizes on all aspects of trading on the exchange. The findings confirm a positive impact of the modifications on the volatility of stock prices and effective valuation of penny stocks, which is why the Exchange Management Board has decided to reduce the penny stock level to PLN 0.10 in the classification of stocks on the Alert List. The modifications of the rules of classification in the Lower Liquidity Zone have been consulted with exchange members acting as market makers. We have ensured a sufficient transitional period for issuers and market makers,” said Piotr Borowski, Member of the GPW Management Board.
The modifications come into force on 1 January 2020. As a result, the first classification of the regulated market segments on the Alert List and in the Lower Liquidity Zone according to the new rules will take place on 27 March 2020.
Following the latest classification on 26 September 2019, the Alert List includes 38 stocks and the Lower Liquidity Zone includes 63 stocks. At this time, 157 issuers participate in the Liquidity Support Programme.
