The introduction of Trading System Amsterdam has helped increase market liquidity and sharpened the prices of the most actively traded stocks so that they are often better than those quoted on rival systems such as SEAQ International, according to a recently completed assessment of the system. The review also revealed that as a result of their active role in the wholesale segment, the hoekmen have made major contributions to the improvements. This is significant since banks and brokers are under no obligation to use the hoekman in the wholesale sector, yet in a majority of transactions they do.
A central market
The Amsterdam Exchanges NV believes the roles played by a central market and the hoekmen/market specialists in its structure work in the best interests of both private and institutional investors. Amsterdam Update spoke to two hoekmen; Frank Oosthoek of OAT, market specialists in ABN AMRO, among other stocks; and Dirk Mozer of Coffeng, market specialist in Royal Dutch Shell and others.
Clever combination
Much of the TSA's success stems from its clever mix of a quote- and order-driven market. This combination has proved worthwhile in a wide range of circumstances. Where the spread resulting from the buying and selling of orders has been too wide, the hoekman's obligation to give continuous quotes in the Limit Order Book can be used to set a sharper price. His activity enhances price formation and the treadability of Limit Order Book stocks, especially when the Book is less full. Frank Oosthoek argues that the hoekman is "making a market as an independent, noncompeting party against a very low fee."
Since increased liquidity attracts more trade, the hoekman firms also welcome the entry of new foreign members to the Amsterdam Exchanges NV. "Join the club. The more the merrier," chimes Dirk Mozer. "Major foreign securities houses will always be able to rely on the market specialist, once they have remote membership."
Added value
Both hoekmen have noticed a huge demand in the market for one-stop shopping. "People can come to us not just to trade, but for information too. For example, after the publication of corporate annual figures, we can offer clients immediate access to all the data they need to trade fast and responsibly." All these services are subject to a modest transaction fee, but the results are worthwhile. Thanks to his wide experience, a hoekman knows the market better than anyone else. A combination of tailor- made advice, sixth sense and background knowledge can enable him to stimulate extra activity in the market. "His neutral position allows him to handle and execute orders with the utmost discretion," Dirk Mozer adds.
For further information on the Amsterdam Exchanges NV, please contact; Thom Hoedemakers, Director of Communications, Amsterdam Exchanges NV, Buersplein 5, 1012 JW Amsterdam, Netherlands, Tel: +31 20 523 4014, Fax: +31 20 523 4950, or enter text search 'Amsterdam Exchanges NV' and 'Business Monitor'.
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ARTICLE
23 February 1996