PARTICIPANTS AND ISSUES TRADED

THE SEGMENTS OF THE SECONDARY MARKET IN DENMARK 

PARTICIPANTS AND ISSUES TRADED

The only stock exchange in Denmark is the K0penhavns 

Fondsbrs.

 It has two sections, the  "Main" Exchange 

(Hoved brsen) and the "After" Exchange(Efter brsen). 
 At present there are 33 stock exchange members, spread 

over 24 member firms. They are appointed as the need 

arises by the Economics Minister and, like the stock 

exchange itself, come under a special Ministry 

supervisory authority which, however, has no officials 

engaged full-time on this supervisory task. Neverthe-

less the supervisory authority makes its presence felt. 

The supervisory regulations have been tightened up 

in recent years, not least in response to three cases 

of insolvency of members in the past decade. The 

regulations lay down minimum capital requirements 

for members and require protection of clients against 

insolvency by insurance or similar means. The authority 

carries out regular audits of members' activities. 

Moreover, it recently instituted an investigation into 

the affairs of a member of the board of directors of a 

corporation on the grounds of alleged insider trading, 

even though there is no regulation  specifically  

prohibiting such trading. The initial outcome of the 

authority's action was the resignation of the director 

in question. 

Although stock exchange members and the stock exchange 

itself are regulated by the government, their accounts 

are not available to the public. For information 

about member firms, in particular  , one has to rely on

  estimates by experts. According to the latter, there are six large member firms, 12 - 14 mediumsized ones and four to six small firms. Only some 10% 

of the orders they execute are received direct from 

their own investor clients. They are both commission 

guided and spread guided, since in principle they 

are allowed to deal for their own account, although 

only in securities for which on a given day they receive,

 or have received, no executable orders. As 

a result of this provision of the Stock Exchange Act of 7 June 1972,

 stock exchange members are not 

allowed to cross clients' orders against bids or offers 

for their own account, although in general they are 

permitted to cross orders outside the exchange provided 

the client has not expressly asked for the order to be 

executed on the stock exchange. 

Some 90% of all investors' orders received by stock 

exchange members come to them indirectly, principally 

through the commercial banks but also via the savings 

banks and to a very small extent also from a dozen so-

called  "outsiders" who are licenced to act as dealers 

and brokers in securities and finance but are not 

authorized to deal on the stock exchange. The finders 

of business  (i.e. the banks, savings banks and 

outsiders) may cross orders like stock exchange 

members without being subjected to the same investor-

protection regulations. The banks are heavily involved 

in securities trading, to a fair extent even for their 

own account, and they frequently bypass the exchange 

members. 

Securities business in Denmark is dominated by the long-term bonds of the mortgage credit associations which at the end of

 1973 accounted for almost 90% 

(1972 88%, 1974 91%) of the bonds outstanding, 

calculated on the basis of nominal value. Apart from 

these, government and local authority bonds have a 

certain importance, while the bonds of industrial 

companies play an almost negligible role. At the end 

of 1973 1395 bonds were listed, which compares with 

341 shares issued by a total of about 250 corporations 

(see Table B - 1). 

Value  and number of bonds and shares listed   

on the stock exchange in Denmark   

1) Excluding some 50 - 60 bonds traded on the Efterbrs 

Apart from six foreign issues these are all Danish securities.

 They include all issues that are 

regularly traded in Denmark. There is no regular 

trade in any bonds or shares other than those listed 

on the exchange, even though many companies' shares 

are not listed. Almost all such unlisted companies 

have less than ten shareholders. 

The stock exchange rules of 16 November 1972 oblige 

listed companies to provide information going beyond 

the minimum statutory requirements and to do so on 

a continuous basis. But the different sections of 

the exchange do not have different disclosure 

requirements. A prospectus must normally be produced 

when a company desires to be listed, and this applies 

to shares and to all bonds except those of credit 

institutions under public supervision. However, it is 

precisely these institutions that are the largest 

issuers. 
the source by Dr.Hartmut Schmidt