OFF-EXCHANGE SEGMENTS OF THE SECONDARY MARKET IN LUXEMBOURG

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

MARKET IN LUXEMBOURG

As outlined in the foregoing section, international securities,especially, are traded over the telephone.

Although no statistics on the extent of off-exchange transactions are available, there is no doubt that sales outside the exchange greatly exceed sales on the exchange.

Above all, certain foreign banks in Luxembourg - in cluing some which are not members of the stock exchange -have made a name for themselves as market makers in Euro bonds.

 In stocks, too, particularly in foreign stocks, and in investment fund units certain firms have become substantial market makers and publish lists showing their quotes.

Several dozen domestic issues are regularly or occasionally bought and sold off the exchange. Where listed securities are involved, it is usually a case of in-house crossing. Since the majority of orders from investors within Luxembourg pass through three banks with many branches, these institutions are in an excellent position to cross orders placed before the opening in their trading departments. In the case of unlisted securities it is again these three banks which are in the best position to arrange deals. In this  field  they  concentrate mainly on dealings  in shares of companies  that are associated with them, since  these  banks tend to know the few shareholders  involved  and  hence to know potential buyers or sellers to whom they can address themselves when  an order comes in. To a limited extent the banks are prepared to take or supply securities for own account. Securities traded in this way are usually shares of companies which are closely held and are therefore seldom bought or sold. However, one of the major banks has so far dispensed with applying for listing of its stock even though it is itself a member of the stock exchange. Its shares are Traded on the market for unlisted securities organized by itself, in other words it acts as agent for transactions in its own stock.