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As a participating member state in the first group of countries to adopt the single currency in 1999, Portugal must ensure a smooth and effective transition to the euro in respect of the securities market.

As a result of discussions started in 1997, the issuer of public debt (Public Debt Management Institute), the Central Bank (Banco de Portugal), the supervisory authority (Capital Markets Commission), both exchanges (Lisbon Stock Exchange and Oporto Derivatives Exchange), and representatives from institutional investors and financial intermediaries recently reached and disclosed some very important decisions. They are as follows:

  • on the first weekend of 1999 all fixed rate treasury bonds (OT) and variable rate treasury bonds (OTRV) maturing after 1999 will be redenominated through the bottom-up approach according to each investors book-entry account held in each financial intermediary registered with the Central Securities Depository;
  • after conversion, euro amounts will be rounded to euro-cents, and nominal values will be renominalized to euro-cents effective from January 1 1999;
  • treasury bonds and treasury bills will be issued in euro from the same date;
  • the redenomination pattern method of shares will be the unitary nominal value alteration, and for private bonds it will be the same as for treasury bonds;
  • the use of pattern methods gives the benefit of special simplification proceedings and costs;
  • Portuguese companies may denominate their share capital in euros as from January 1 1999;
  • trading and settlement of securities, issuing and bidding in public offers will be done in euros as from January 1 1999;
  • investment funds will disclose information in euros, as from the same date; and
  • to anticipate the monetary conversion and to introduce the domestic market to international practices, bonds will begin to be traded on a percentage of their nominal value as from November 1 1998, regardless of denomination currency.

Alterations in fundamental laws, such as the Companies and Securities Code, must be carried out and all these changes will require accurate and cost-effective procedures to benefit the incentives drawn up to users of pattern methods.

Miguel Castro Pereira

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