THE SEGMENTS OF THE SECONDARY MARKET IN THE NETHERLANDS

We talked in a previous article about OFF-EXCHANGE SEGMENTS OF THE SECONDARY MARKET IN DENMARK

Today we talk about: II.THE SEGMENTS OF THE SECONDARY MARKET

IN THE NETHERLANDS

I. PARTICIPANTS AND ISSUES TRADED

Since 1974 there has been one stock exchange only in the Netherlands, the Amsterdamse effectenbeurs (AEB) the exchanges in Rotterdam and The Hague had to close for lack of business. The members of the AEB form the Vereniging voor de Effectenhandel. The Vereniging is a private association. It owns the exchange building and its board of directors and committees lay down the necessary regulations and fulfill all functions of management and supervision.

 The members of the Vereniging were granted a monopoly as agents for

securities trading in 1947 by a Ministerial Decree.This does not mean that it is mandatory to deal through the stock exchange, however, as the members may at any time trade off the exchange, either as agents or for their own account. If a transaction in securities is to be effected without the participation of a member of the stock exchange, it must be approved by the Minister of Finance.

In principle, all members of the AEB may deal for their own account and they are therefore spread guided to some extent. However, their main earnings come not from realized spreads but from commissions charged to investors or other members. Among the primarily investor commission guided members are the banks, which have brought securities business into their range of services,

and the stock brokers, who devote themselves almost

exclusively to securities business. The so-called "hoeklieden",on the other hand, are chiefly guided by member or floor commissions. They specialize in certain securities and accept orders from the investor-commission minded members in these securities for execution. The hoeklieden themselves have no direct contact with private clients or institutional investors. For his services the hoekman receives a

member commission, which is one tenth of the investor commission. At the end of 19 75 55 of the 178 member firms of the AEB were firms of hoeklieden, 84 were brokers and 39 were banks.

The Stock Exchange Act of 1914 placed the responsibility for supervising the stock exchanges with the Finance Minister. The Minister is not actively using the powers granted him in this regard but has devolved his functions to the Vereniging. The Minister must take a.decision on every application for listing of a security; he has always accepted the recommendation of the AEB. The Finance Ministry has no officials engaged full-time in securitydealing matters. To the extent that the member firms are subject to the supervision of the central bank, they must comply with the latter's solvency regulations. At the end of 1974 675 stocks and 1459 bonds were admitted to a quotation. The 29 7 Dutch stocks (excluding investment trusts) had a market value of just under Dfl. 29 000 million, while the nominal value of domestic bonds amounted to Dfl. 41 000 million. The stocks of the 50 largest public corporations represent 90% of the market value of all listed shares.

 Table C - 1

Number of securities listed on the Amsterdam

Stock Exchange, by type of security

THE SEGMENTS OF THE SECONDARY MARKET IN THE NETHERLANDS

In 19 74 stock exchange turnover in domestic shares

amounted to 30% (19 73: 39%) of the total outstanding;

the corresponding figure for domestic bonds was 14%.

The significance of domestic and foreign securities

for stock exchange trading is shown by Table C - 2.

Table C - 2

Stock exchange volume of sales in 1973 and 19 74

by type of security, in Dfl. thousand millions.

THE SEGMENTS OF THE SECONDARY MARKET IN THE NETHERLANDS
the source by Dr.Hartmut Schmidt