Title |
Electronic Issuance and the Future of Primary Dealer Systems |
|---|---|
Author(s) |
Sogaard Holm Birgitte - Danmarks Nationalbank, Financial Markets, Governement Debt Management Section |
Title of Book |
Debt Management and Government Securities Markets in the 21st Century |
Book Editor |
OECD |
ISBN |
9264198075 |
Publisher |
OECD Publishers |
Place of Publication |
Paris |
Date of Publication |
2002 |
Number of pages |
10 |
Initial pages |
73 |
Final pages |
82 |
Description URL |
http://www.oecdbookshop.org/oe[..] |
Abstract |
This chapter gives an overview of initiatives taken by OECD debt managers in implementing electronic systems in the primary market. In addition, their impact on market structures will be analysed.
The use of electronic systems in the primary market consists of: 1) electronic auction systems (in some cases also handling buy backs and switching operations); 2) syndication; and 3) direct issuance to retail investors. An increasing number of issuers use electronic auction systems. Auctions are the most commonly used issue method. However, after the introduction of the euro a number of EU countries (in particular the smaller ones) have introduced syndication as a supplement to auctions. This issue method is effective in rapidly building-up an outstanding volume of considerable size. Electronic book building typically supports syndication. However, experiences thus far indicate that the contacts between the sales team and the investors remain very important, although there is the technical possibility to enter bids directly into the system. A special issue related to electronic sales is direct issuance to retail investors. Technological developments – notably the Internet – enable issuers to reach retail investors directly. Thus far, only a limited number of countries have used this possibility. The key consideration is costs. Accordingly, the different electronic systems for selling directly to retail investors reflect different cost minimising strategies. An important strategic issue concerning electronic issuance is the ability to directly reach a broader investor base. In parallel with the globalisation of financial markets, and the establishment of the euro zone bond market in particular, issuers have become increasingly concerned about reaching a broad and diversified investor base. A much-debated issue in this context is the future role of primary dealers. |
Table of contents |
I. Introduction and executive summary
II. Electronic auction systems III. Should issuers develop their own electronic auction systems? IV. Syndication and electronic bond issuance V. Issuance to retail investors VI. The future of primary dealers VII. The future of primary debt markets VIII. Concluding remarks Notes Reference |
Language |
English |
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