Fact Book 2005 - NASDAQ OMX Trader Nordic

The bond market
Market making in government bonds
In November 2003, wholesale trading in Danish government
bonds was transferred to the international electronic MTS
trading system, which is used for trading in most European
government bonds.
In connection with the above, the Exchange established a
market maker scheme for government bonds on the
Copenhagen Stock Exchange. Thus, since 1 December
2003, six banks have currently quoted prices in the
benchmark government bonds in the Exchange's trading
system. The banks quote two-way prices for at least 95 per
cent of the period between 9:00 and 16:00. The market
maker scheme has meant that orders for benchmark
government bonds are available in the trading system
throughout the day. This being the case, private investors
have the possibility of trading government bonds on an open
and transparent market; a unique possibility from an
international point of view.
New types of bonds
A range of new mortgage bonds were listed on the
Copenhagen Stock Exchange in 2004. Since the autumn of
2003, it has been possible to trade the first interest-only
bonds, where the borrower may defer instalments on the
loan for up to ten years. Subsequently, mortgage bonds
which combine the advantages of the low short-term rates (6
months) and the fixed rate 30-year mortgage were issued.
These types of loan allow the borrower to obtain a loan
where a short-term, variable rate (typically the 6-month
CIBOR plus an additional charge of 0.5 points) is payable
and which incorporates a guarantee that the interest rate
does not exceed a fixed ceiling.
Refinancing of housing loans
In December, the mortgage banks carried out a number of
auctions to refinance the borrowers' short-term loans such as
adjustable rate loans. A large part of the auctions were held
in the Exchange's trading system in the so-called issue submarkets.
In 2004, five issuers participated in the auctions,
Realkredit Danmark, Nykredit, Totalkredit, Nordea Kredit and
DLR as against only three in 2003.
The total turnover at the auctions reached an all-time high
DKK 283 billion. The auctions are the largest of its kind not
just in Denmark, but also internationally.
The Fondsportalen
The Copenhagen Stock Exchange and VP Securities
Services have developed a web portal - the Fondsportalen -
to which the issuers of bonds report the so-called 'master
data'. The idea is to simplify the issuers' routines and reduce
their consumption of resources, when they send master data
in connection with a bond issue.
The Fondsportalen is scheduled to open in the first half of
2005.
The derivatives market
Derivatives are traded in the electronic trading system Click.
The Copenhagen Stock Exchange, Stockholm Stock
Exchange, Oslo Børs, EDX London and their respective
clearing houses have agreed to set up a joint order book for
Danish, Swedish and Norwegian derivatives. Affiliated
members have equal access to the order books containing
the derivatives admitted to listing on the individual
exchanges, irrespective of place of office or which exchange/
clearing house they are a member of. Members of the Danish
derivatives market have access to trading in both Danish and
Swedish derivatives.
Trades in Click are concluded with an anonymous
counterparty as it is the local clearing house that acts as
counterparty.
It is not a requirement that trades in listed derivatives are
executed via the electronic trading system, however, trades
concluded outside Click shall be reported to the Exchange/
Clearing Centre in order to fulfil the reporting obligation and
to be covered by the Clearing Centre's guarantee.
All concluded contracts are registered in individual accounts
and the Clearing Centre acts as a counterparty to the buyer
and as a counterparty to the seller.
Trading is regulated by rules laid down by the Copenhagen
Stock Exchange and the FUTOP Clearing Centre. The rules
have been harmonised with the rules applicable to
38 KØBENHAVNS FONDSBØRS FACT BOOK 2005