OFF-EXCHANGE SEGMENTS OF THE BELGIAN SECURITIES MARKET

We talked in a previous article about: EXCHANGE SEGMENTS OF THE SECONDARY MARKET IN BELGIUM

Today we talk about: OFF-EXCHANGE SEGMENTS OF THE BELGIAN 

SECURITIES MARKET

As already stated under I., the banks and "agents" must in principle funnel all orders in listed securities through the stock exchange. If no order is received, off-floor trading is legally permissible under certain circumstances. In that case a bank or "agent” must as a rule act as counterparty or at least prepare the contract note.

In the case of Belgian bonds, the banks are generally prepared to enter upon transactions, since they hold large stocks of these titles themselves.

Nevertheless in this connexion the "agents de change" and "agents de change correspondants "have a monopoly in registering secondary market  transactions  up to nominal amounts of Bfrs.

 10million.The banks are therefore primarily interested in larger transactions. With other bonds, too, particularly Eurobonds, the banks regularly trade for own account. Here they do not, in principle, need to use an "agent".

 Although holdings of Eurobonds are restricted due to currency risks, the banks make them-selves available as counterparties in these securities even for very large transactions.

With regard to stocks, the banks' position on the off-floor market is weaker, as they are allowed to hold temporarily only positions in stocks. Nevertheless they are frequently brought into stock transactions by investors.

 In many such instances the customer's order can be executed only on a foreign stock exchange, in other instances the Belgian off-floor market is used.  Like most stock exchange firms the banks operate here   only between the customer and one of the larger "agent de change" firms specializing in certain issues.

These firms normally act as brokers and also hold  positions in the securities in which they specialize  whether these be unquoted Belgian stocks or foreign  stocks.

 Some foreign stocks, in particular, enjoy a  brisk turnover off the exchange.  An even more important role - from the point of view

of turnover - is probably played by block dealings in Belgian stocks. Here, too, some houses, especially banks, well known for their experience and their capacity, are prepared to arrange such business.

An enquiry from an interested party will usually lead to two or three contacts. If the other side is found in this way, the bank accepts the securities for its own account and then immediately sells them again.

Although there are no statistics, there is reason to suppose that the turnover in off-exchange block business and particularly in bonds may be substantial in comparison with sales on the stock exchange.