A speech delivered at a luncheon offered to the participants of the conference 'Will ISD deliver?', on March 1st, 1996 in London.
On behalf of the Amsterdam Exchanges NV I am delighted to host this luncheon today. The conference organizers, the European Capital Markets Institute (ECMI) and the Royal Institute of International Affairs, to whom I pay tribute, have managed to sponsor an excellent Report and to gather an impressive and professional audience to discuss the challenges facing the European Capital Markets as a consequence of the European directives.
The report is of high quality indeed. As the presentations and discussions during this conference are showing, it stimulates a heated debate on important policy matters for issuers, investors and market organisations alike, that go beyond the European scene.
Yesterday you heard comments from the London, Frankfurt and Paris Stock Exchanges. Let me take this opportunity to say a few words on the position and strategy of the Amsterdam Exchange in the European market.
For centuries, Amsterdam markets have been very innovative and international-oriented, with a substantial foreign influence. The world's first shares issued to the general public were those of the Dutch East India Company. Today some 20 to 30 big international companies including Royal Dutch Shell, Unilever, KLM, ABN-AMRO, ING and Heineken - constitute the premier league of our stock market and are participating in Eurolist in order to increase their visibility to European investors. Our guilder-bonds are also in high demand internationally, profiting from our strong currency and the solid, low inflation growth of our economy. Small wonder that we have welcomed the ISD as an investment not only to promote a level playing field, but also to open up our market further. Our economy functions as a gateway to Europe not only for goods and passengers (Rotterdam and Schiphol Airport) but also for financial flows and services.
Although servicing a medium-sized economy, the Amsterdam Exchanges NV ranks among the top ten in the world in terms of market capitalisation and for a continued growth we have no choice but to open up further.
Yesterday we discussed the future of Stock Exchanges; some seemed to have doubts. As the regulated capital market the ASE performs an essential role in the economy, and I am convinced it will continue to do so if it follows the correct strategy. Let me mention the five main elements of our strategy. They relate to the issues that were discussed here.
a) The first element, I mentioned already, is to open up, to facilitate access for high quality participants - be it listed companies or remote members. In order to maintain the price- leadership in Dutch stocks and bonds, we have to attract maximum liquidity also from the 30 to 40% of the holdings that are in foreign hands.
b) Secondly we respond to the wishes of the big and small investors, big and small companies and big and small intermediaries by offering them the specific trading facilities they ask for. This means a central order book, inter-dealer-broker as well as market making facilities, with different levels of transparency. We are fortunate in having maintained and adjusted the traditional specialists (hoekman) function, in order to stimulate a continuous market and to keep the pricing and liquidity of the market segments together. In short, we have invested in a hybrid system that in practise has proved it really works.
c) We believe in an integrated approach of trading and settlement in a locked-in arrangement : the trade on the stock exchange includes settlement, be it "netting" or "trade for trade".
d) We also believe in an integrated approach of cash and derivatives markets, and we are working on a merger with the EOE for that purpose. The more efficient the links between the two markets are, the better the liquidity and the lower the cost.
e) As has been mentioned sever times yesterday, the Stock Exchange of today should be a commercial service provider organised as a private company with the main participants as its shareholders. We are therefore transforming ourselves into a holding company with the stock exchange, the derivatives exchange and the central depository as its three subsidiaries, and the intermediaries, listed companies and institutional investors as its shareholders.
I have no doubt that in this new setting and on the basis of its reputation and experience, the Amsterdam Securities Markets will be able to compete in the European marketplace.
The theme of this conference is "Will ISD deliver?" A more relevant question for us practitioners is "What Should ISD deliver?" My answer is it should lead to a level playing field for the securities market in Europe without undue outside regulation and interference. Under those conditions the European Stock Exchanges will open and will be part of a network of efficiently linked and easily accessible quality securities markets to the benefit of listed companies and investors. ISD delivers modern market places in Europe. In fact today, there aren't any so-called traditional stock exchanges left. Certainly not Amsterdam.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Thom Hoedemakers - Director of Communications - Amsterdam Exchanges NV - Tel: +31 20 523 4014 or Paddy Manning - St James Corporate Communications - London - Tel: 0171 436 4101; or enter a text search and 'Business Monitor'.
