For the trade in Government Bonds the division between wholesale and retail trading became operational in the course of 1993.
The wholesale limit for Government Bonds is NLG 2.5 million nominal value. Orders equal to or above the wholesale limit may be processed through the Amsterdam Treasury bond Market (ATM) system but may also be executed in the retail market.
Amsterdam Exchanges NV (ASE) members and a great number of foreign firms (if admitted as Corporate Members) can enter orders in the ATM, which makes it an order-driven market.
The pivot in the ATM is the Inter Dealer Broker (IDB), who by regulation may not take up positions. The IDB is a neutral middleman acting as counterparty when a transaction is effected: he buys from the seller and at the same time sells to the buyer. Usually settlement will take place through the international clearing organizations Cedel and Euroclear or through the Amsterdam central securities clearing corporation Effectenclearing B.V. or Kas-Associatie N.V.
Direct dealing (trading outside any exchange system) among stockbroking firms is only permitted for equal to or above the wholesale-limit.
Recent figures show that with respect to Dutch Government Bonds the volume of business transacted in Amsterdam has increased for the first time in years.
Coupling
Orders below NLG 2.5 million are to be executed in the retail segment of the Exchange. Retail trading takes place in the central market via two Hoekmen. The price obtained is as good as or better than the Best Bid & Offer (BBO) of the IDB. The BBO is determined by the highest bid price and the lowest price displayed on the IDB screen.
Through this coupling between the retail market and the wholesale market the interests of the retail client could not be better protected.
For further information on the Amsterdam Exchanges NV please contact Joost Maas on +31 20.5234567.
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.
