This content is from: Local Insights

The Netherlands

Electronic platform for Dutch government bonds

The Dutch government has published its intention to participate in a platform for the electronic trading of Dutch government bonds. Thirteen banks and the Dutch government will participate together with MTS, an Italian company hat owns the required technology, in a new company that will operate the platform under the name MTS Amsterdam.

Dutch government bonds are traded in a professional over-the-counter market. Recently, a Primary Dealer system was introduced and agreements have been made with 13 banks to participate in the issue and international distribution of new government bonds to optimize liquidity. The new platform for electronic trading is a further means to promote liquidity and accessibility.

Electronic trading is on the rise. In Italy a successful electronic trading system has been operative since 1988. This system was originally created by the Italian Ministry of Finance and has now been privatized as MTS. The system has proven that it can maintain liquidity in bond trading even in difficult times.

In the future, the Dutch platform may be connected to EuroMTS in London, a pan- European electronic platform for trading in the largest 30 European bonds from Germany, France and Italy.

MTS Amsterdam can be regarded as an electronic interdealer broker. Bid and offer prices will be available on the computer screen, and transactions can also be concluded on the screen. The primary dealers will have the obligation to give quotes for both selling and buying.

In addition to the primary dealers acting as market makers, there will be market takers - financial brokers admitted to the system who will make the link with the investors. Trading will be anonymous until a transaction is concluded. After conclusion of the transaction, the system will automatically send all relevant data for every transaction to each of the parties for clearing and settlement.

Gijs van Leeuwen

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