Latin American Capital Markets

DEMUTUALIZATION OF EXCHANGES 289AmsterdamAmsterdam has the world's oldest organized stock exchange, dating back to the earlyseventeenth century. Until recently, it had a floor and a specialist system with somesimilarities to the NYSE agency auction system. In the late 1990s, however, the windsof change buffeted the Amsterdam Stock Exchange and caused it to give up its floorand adopt an electronic trading system, affiliate with the Amsterdam options exchangeand the Amsterdam futures exchange, demutualize, and then affiliate with theParis and Brussels stock exchanges in the Euronext project. In addition, over the past15 years, Amsterdam went from a regulatory regime, which was almost entirely conductedby exchanges as SROs, to one in which a new government-designated and-supervised SRO assumed many regulatory responsibilities.Prior to the mid-1980s, most securities regulation in the Netherlands wasself-regulatory.The minister of finance supervised the stock exchange under a 1914law, but government regulation was not on a day-to-day basis. In 1988, the SecuritiesBoard of the Netherlands was created to supervise the securities markets and securitiesexchanges.This board is an independent body, removed from both the governmentand the private sector. It was created in response to various scandals in themarkets in the mid-1980s to oversee the Amsterdam Stock Exchange, the EuropeanOptions Exchange, and the financial futures market. In the early 1990s, securities reformlegislation was passed, giving the minister of finance clear authority to supervisethe Securities Board.These reforms were prompted in part by the need to designatea supervisory body in connection with the implementation of European Union securitieslaw directives. However the loss of the Amsterdam Stock Exchange's marketshare in Dutch securities to London in the early 1990s prompted more far-reachingbusiness and regulatory changes.On January 1, 1997, the European Options Exchange and the AmsterdamStock Exchange merged.The merger included the settlement systems and depositoriesof these organizations. The activities of the futures market were then included.The Amsterdam Exchange demutualized, selling half its shares to former exchangemembers and placing the remainder with institutional members and listed companies.In connection with these transactions, the Amsterdam Exchange gave up its floor forthe trading of equities, changed the role of the "hoeckman," whose role was to providequotes to supplement the order-driven market, and began recruiting internationalbrokerage houses for remote membership.After the Amsterdam Exchange demutualized, it merged with the Paris andBrussels stock exchanges to form Euronext, which began operations in SeptemberCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub