As requested by the dealers the launch of bond trading in SAXESS will be postponed for two weeks to 9 October, so that the implementation of a new system does not coincide with a political event which may cause volatility on the fixed income market.
From the outset the bond market in SAXESS will consist of an ordinary sub-market, where all bonds are traded, an interest sub-market, which is only used to signal buy and sell interest, an issue market, which handles Danmarks Nationalbank's first offerings of new government bonds and, finally, 22 electro broker markets, where market maker securities are traded.
The 22 electro broker markets consist of 12 sub-markets for government bonds - one sub-market for each government bond traded in the market maker scheme of the Danish Securities Dealers' Association - including the 10-year benchmark, which is also traded in the Copenhagen Stock Exchange's market maker scheme, 9 sub-markets for mortgage bonds - one sub-market for each standard mortgage credit bond traded in the market maker scheme of the Danish Securities Dealers' Association, and one sub-market for trading in mortgage bonds with one settling period which mature on the following repayment date.
The futures traded under the market maker scheme of the Danish Securities Dealers' Association, will be traded in the same sub-market as the underlying asset, once interest rate derivatives have been transferred from ELECTRA to SAXESS. The date has not been fixed yet, but the interest rate derivatives are expected to be transferred to SAXESS not later than 1 December 2000. Until then the derivatives will continue to be traded in the ELECTRA system. All 22 electro broker sub-market will have identical parameters with a compulsory "All or Nothing" acceptance functionality and a minimum trading lot of DKK 25 million.
The Copenhagen Stock Exchange will administer the member firms' authorisations to trade and receive pre-trade information on the individual sub-markets. Only registered market makers that quote prices under the market maker scheme of the Danish Securities Dealers' Association have access to pre-trade information and trading on the relevant sub-market.
Today, Treasury bills are traded in denominations of DKK 1 million and the price is stated in Danish kroner per security. As a consequence of the transfer of bonds to SAXESS, the Treasury bills will be traded in accordance with the practice on the rest of the bond market. After the transfer to SAXESS the Treasury bills will be traded in nominal volumes and the price will be stated in per cent. The latter means that the redemption price of the Treasury bills must be changed from DKK 1 million to a price of 100.
