The Amsterdam Exchanges NV is on the right track, the bourse's management trumpeted at last week's presentation of it's 1994 annual report. Last year's overhaul of its share trading system and the decision to open the central Dutch market to foreign securities houses will keep Amsterdam from being further overshadowed by the London market.
'The Amsterdam bourse has nearly completed its transformation from an association of members to a professional organisation,' the stock exchange general manager Hans Brouwer said. The bourse is now studying how it will implement the final phase of that transformation - changing its legal status from an association to a corporation. A special committee set up to investigate the change will submit its report later this year, along with the recommendations as to whether the bourse should become a private or public company. ASE chairman Boudewijn van Ittersum expects the bourse's new corporate status to take effect before January 1 1996, at which time the European directive for the liberalisation of EU securities trading takes effect.
The bourse's current association structure has been the cause of numerous complications. The Stock Exchange Association (Vereniging voor de Effectenhandel) is the legal owner of the bourse, but no clear distinction is made between its capacity as a shareholder and its other functions, such as exercising supervision and providing trading facilities and services.
As an incorporated bourse would most likely profile itself as a facilities-oriented company, the plans raise the question of what would become of its supervisory activities. Currently the bourse's 30 strong compliance and enforcement department caries out investigations into insider trading and other bourse related fraud. One possibility offered by bourse observers is that the department would be absorbed into the independent Netherlands Securities Board (STE), which regulates the Dutch financial markets on behalf of the finance ministry.
The association status has also made decision-making a cumbersome process. Decisions taken by the bourse council, comprising representatives of the member banks, brokers and market specialists (hoekman) firms must reflect some degree of consensus among the three member groups, while interests often clash sharply.
The reorganisation is aimed at increasing the bourse's decision-making capability. Having the incorporation in place by January 1 would facilitate the necessary modifications to the central system for settling transactions.
Under the tentative plans, the Stock Exchange Association would continue to exist and would retain 100% of the stock exchange's shares for the time being - the bourse is currently considering a three-year period, after which time new shareholders could be taken on.
To a certain extent, the stock exchange would be following the model of the EOE-Optibeurs, whose options and financial futures exchanges are incorporated as separate public companies.
The plan to incorporate was first mooted two years ago, and was revived last year when the ASE and the EOE-Optibeurs were investigating the feasibility of a merger, following the examples of the stock and options exchanges in Switzerland, Germany and Italy. The merger talks between the Amsterdam bourses, however, were subsequently abandoned.
According to ASE chairman Van Ittersum, merger negotiations with the EOE could be resumed at any time: 'I'm always ready to look at it again. We will have to consolidate our forces. Judging from trends abroad it's time we got to work on it.'
Managing Director Brouwer cited positive trends in Amsterdam's international competitive position as a result of the new trading system. Amsterdam's share of trading in Dutch stocks rose to 65% last year from 55% two years ago, he said. And while the new share trading system was not implemented until October of last year, Brouwer credits the new system for the higher market share. He said that since last October, the average spread between bid and offer prices on nearly all Dutch shares is narrower on the Amsterdam market than on London's Seaq-International system. Among the 30 most active shares, only Royal Dutch Petroleum, DSM and Poly-Gram carry wider spreads in Amsterdam than in London.
Since October the Amsterdam market has been split into retail and wholesale segments. Transactions whose values fall below a certain limit are carried out on the retail side of the market, with the hoekman firm assigned to each share class acting as central intermediary. Larger transactions on the wholesale side may be executed directly between buying and selling parties; the hoekman may participate in wholesale transactions. Brokers may act as wholesale market makers by advertising their prices to the investing public via quote vendors like Reuters and Bloomberg.
Brouwer noted that the hoekman firms have been involved in 32% of wholesale transactions, even though their participation is mandatory only in retail transactions. According to the bourse's share trading system on Amsterdam's international competitive position, parties from the UK and other foreign countries have been increasingly attracted to the wholesale market since the vendors' quotes have shown narrower spreads on Amsterdam on Dutch shares.
The ASE reported 1994 net profit of f 9.7 mln, despite an f 8 mln refund to members and a f 3 mln contribution to provisions against restructuring costs for the hoekman sector. The sector was drastically slimmed down to make way for the new trading system.
From The Netherlander June 10-16 1995
For further information on the Amsterdam Exchanges NV please contact Joost Maas on +31 20.5234567 or enter a text search "Amsterdam Exchanges NV" and Business Monitor".
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Business briefing Publishing Ltd, 1997 Tel: +44 171 820 7733
'The Amsterdam bourse has nearly completed its transformation from an association of members to a professional organisation,' the stock exchange general manager Hans Brouwer said. The bourse is now studying how it will implement the final phase of that transformation - changing its legal status from an association to a corporation. A special committee set up to investigate the change will submit its report later this year, along with the recommendations as to whether the bourse should become a private or public company. ASE chairman Boudewijn van Ittersum expects the bourse's new corporate status to take effect before January 1 1996, at which time the European directive for the liberalisation of EU securities trading takes effect.
The bourse's current association structure has been the cause of numerous complications. The Stock Exchange Association (Vereniging voor de Effectenhandel) is the legal owner of the bourse, but no clear distinction is made between its capacity as a shareholder and its other functions, such as exercising supervision and providing trading facilities and services.
As an incorporated bourse would most likely profile itself as a facilities-oriented company, the plans raise the question of what would become of its supervisory activities. Currently the bourse's 30 strong compliance and enforcement department caries out investigations into insider trading and other bourse related fraud. One possibility offered by bourse observers is that the department would be absorbed into the independent Netherlands Securities Board (STE), which regulates the Dutch financial markets on behalf of the finance ministry.
The association status has also made decision-making a cumbersome process. Decisions taken by the bourse council, comprising representatives of the member banks, brokers and market specialists (hoekman) firms must reflect some degree of consensus among the three member groups, while interests often clash sharply.
The reorganisation is aimed at increasing the bourse's decision-making capability. Having the incorporation in place by January 1 would facilitate the necessary modifications to the central system for settling transactions.
Under the tentative plans, the Stock Exchange Association would continue to exist and would retain 100% of the stock exchange's shares for the time being - the bourse is currently considering a three-year period, after which time new shareholders could be taken on.
To a certain extent, the stock exchange would be following the model of the EOE-Optibeurs, whose options and financial futures exchanges are incorporated as separate public companies.
The plan to incorporate was first mooted two years ago, and was revived last year when the ASE and the EOE-Optibeurs were investigating the feasibility of a merger, following the examples of the stock and options exchanges in Switzerland, Germany and Italy. The merger talks between the Amsterdam bourses, however, were subsequently abandoned.
According to ASE chairman Van Ittersum, merger negotiations with the EOE could be resumed at any time: 'I'm always ready to look at it again. We will have to consolidate our forces. Judging from trends abroad it's time we got to work on it.'
Managing Director Brouwer cited positive trends in Amsterdam's international competitive position as a result of the new trading system. Amsterdam's share of trading in Dutch stocks rose to 65% last year from 55% two years ago, he said. And while the new share trading system was not implemented until October of last year, Brouwer credits the new system for the higher market share. He said that since last October, the average spread between bid and offer prices on nearly all Dutch shares is narrower on the Amsterdam market than on London's Seaq-International system. Among the 30 most active shares, only Royal Dutch Petroleum, DSM and Poly-Gram carry wider spreads in Amsterdam than in London.
Since October the Amsterdam market has been split into retail and wholesale segments. Transactions whose values fall below a certain limit are carried out on the retail side of the market, with the hoekman firm assigned to each share class acting as central intermediary. Larger transactions on the wholesale side may be executed directly between buying and selling parties; the hoekman may participate in wholesale transactions. Brokers may act as wholesale market makers by advertising their prices to the investing public via quote vendors like Reuters and Bloomberg.
Brouwer noted that the hoekman firms have been involved in 32% of wholesale transactions, even though their participation is mandatory only in retail transactions. According to the bourse's share trading system on Amsterdam's international competitive position, parties from the UK and other foreign countries have been increasingly attracted to the wholesale market since the vendors' quotes have shown narrower spreads on Amsterdam on Dutch shares.
The ASE reported 1994 net profit of f 9.7 mln, despite an f 8 mln refund to members and a f 3 mln contribution to provisions against restructuring costs for the hoekman sector. The sector was drastically slimmed down to make way for the new trading system.
From The Netherlander June 10-16 1995
For further information on the Amsterdam Exchanges NV please contact Joost Maas on +31 20.5234567 or enter a text search "Amsterdam Exchanges NV" and Business Monitor".
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Business briefing Publishing Ltd, 1997 Tel: +44 171 820 7733
