Financial instruments

Shares are equity financial instruments that reflect the owner's participation in the share capital of a joint-stock company. They are divided into registered and bearer shares, but only bearer shares are allowed for stock exchange trading – these can be bought and sold through brokerage offices and firms. The subject of stock exchange trading can only be shares existing in the form of electronic records, which are stored in the National Depository for Securities (KDPW). Owning shares is associated with, among other things, the right to participate in and vote at the company's general meeting, the right to information about the activities of the joint-stock company, and the right to a dividend.

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Bonds are debt securities that can take the form of a physical document or a dematerialized form, based on which the issuer commits to fulfilling a specific obligation to its bondholders in the future. At the maturity date, the issuer redeems the bonds along with the interest due to the bondholder, according to the terms of the issue. Several types of bonds exist in the market, including coupon bonds (where the debt is interest-bearing) or zero-coupon bonds (where the bondholder's profit is the difference between the purchase price and the bond's nominal value). Bonds can also be classified based on the issuer: government bonds (issued by the State Treasury), municipal bonds (issued by local government units), and corporate bonds (issued by companies).

To protect investors, some bonds are secured by various assets, such as real estate mortgages, pledges on shares and stocks, other movable property, or guarantees provided to the issuer. These bonds are issued as secured bonds, in contrast to unsecured bonds.

Bonds are quoted in percentage points of the nominal value. The settlement price of a bond is the market price plus interest due to the bondholder for the period during which the bond was held. Interest is listed in the interest table. It is important to note that when determining the amount of interest, the settlement date in the National Depository for Securities (KDPW) is taken into account.

Futures contracts are financial instruments that represent an agreement between two parties: the buyer, who takes a long position, and the seller, who takes a short position in the futures contract. The subject of the futures contract is the future value of a specified underlying asset (e.g., stocks, currencies, indices).

Types of positions taken

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The decision to open a position (purchase/sale of a contract) involves the collection of a margin, required by KDPW and defined as a percentage of the contract value. The purpose of the deposit is to reduce the risk of non-compliance with the terms of the contract. In a situation where a position is closed profitably, the deposit is unlocked in full. If the open position bears a loss and falls below the margin specified by KDPW, the Broker House calls on the Investor to make up the missing amount to the amount of the initial deposit determined by the Brokerage House, or closes the position. The margin changes daily and is set by the KDPW every day after the end of the session. Investment in derivatives involves the application of leverage, which is expressed in the form of the so-called multiplier. It specifies the number of monetary units per unit of the underlying instrument.

Multiplier

Indexes x 10 zł or x 20 zł
Currencies x 1000 zł
Shares x 100 pieces or x 1000 pieces

Index Contract Names

FW20drr20 where:
F — designation of the futures contract
W20 — short name of the underlying instrument W20 —>WIG20
d — month of expiry:
H — March
M — June
U — September
Z — December
rr — the last two digits of the expiry year of the futures contract
20 — contract multiplier

FW40drr where:
F — designation of the futures contract
W40 — short name of the underlying instrument W40 —>WIG40
d — month of expiry:
H — March
M — June
U — September
Z — December
rr — the last two digits of the expiry year of the futures contract

Names of contracts for shares

Fbbbdrr where:
F — designation of the futures contract
bbb — short company name
d — month of expiry:
H — March
M — June
U — September
Z — December
rr — the last two digits of the expiry year of the futures contract

Names of currency contracts

Fbbbdrr where:
F — designation of the futures contract
bbb — short name of currency e.g. USD, EUR
d — month of expiry:
F — January, G — February, H — March, J — April, K — May, M — June, N — July,
Q — August, U — September V — October, X — November, Z — December
rr — the last two digits of the expiry year of the futures contract

Names of contracts on WIBOR

Fbbbdrr where:
F — designation of the futures contract
bbb — short name of the WIBOR rate (1MW — one-month WIBOR, 3MW — three-month WIBOR, 6MW — six-month WIBOR)
d — month of expiry:
F — January, G — February, H — March, J — April, K — May, M — June, N — July,
Q — August, U — September, V — October, X — November, Z — December
rr — the last two digits of the expiry year of the futures contract

Names of Bond Contracts

Fbbbdrr where:
F — designation of the futures contract
bbb — short name of the basket of bonds (STB — short-term bonds, MTB — medium-term bonds, LTB — long-term bonds)
d — month of expiry:
H — March
M — June
U — September
Z — December
rr — the last two digits of the expiry year of the futures contract

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Options are financial instruments in the form of contracts between the option holder and the buyer of the right to purchase (call option) or the right to sell (put option) the underlying asset at an agreed-upon price. The option writer is obligated to fulfill the contract by buying or selling the underlying asset on the option’s exercise date. The option holder takes a long position, while the option writer takes a short position in the transaction.

In Poland, options are divided into:

• Call options, which, at a specified future date, grant the holder the right to receive an amount equal to the difference between the settlement price and the strike price of the option.
• Put options, which, at a specified future date, grant the holder the right to receive an amount equal to the difference between the strike price of the option and the settlement price.

When entering into an options contract, the parties must specify the quantity of the underlying asset involved in the contract, the agreed-upon strike price, and the expiration date of the option. In the case of transactions on a regulated market, the holder of the long position is required to pay the premium, while the option writer with the short position must provide collateral.

The maximum profit for an investor holding a long position in options is unlimited, while the maximum profit for an investor holding a short position is limited to the premium received when the position is opened. For options listed on the Warsaw Stock Exchange (GPW), the premium is equivalent to the transaction price multiplied by an appropriate multiplier, which for options on the WIG20 index is 10 PLN.

Options expire on the third Friday of the month of their respective series. If there is no session on that day according to the GPW calendar, the expiration date is the last trading day before the third Friday of the month of expiration.

Option Name:

Obbbdrrkkk, where:

• O – indicates the type of instrument.

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