Gov’t bond e-market preparing for launch

The new government bond primary market is expected to be launched on the Athens Stock Exchange (ASE) in about three weeks’ time, after the clearing by the board of governors last week of a series of issues relating to the market of fixed-income securities. It will now be possible for bonds to be traded via the ASE’s electronic system and for «basket» orders – by groups of investors – to be placed. The Central Securities Depositary, in collaboration with the ASE and the Bank of Greece, has been working hard in recent weeks, laying the ground for the launch of the new market, and a successful test was run last Thursday. What remains is fixing its correspondence in real time with the depositary, the central bank, commercial banks and stockbrokers who already all operate through the ASE’s electronic trading system (SAT). On the new market, investors will be able to buy and sell government securities through the same procedures that apply to stocks. Its operation is seen as making a strong contribution to the growth of a broad retail bond market, making such securities more accessible and attractive for investors and giving the government greater flexibility in meeting its borrowing requirements. It is also seen as giving commercial banks greater flexibility in managing their portfolios. Today only 4 percent of government securities go to the general investing public through the primary market. The Finance Ministry’s recent decision to allow stockbrokerages to distribute bonds through the primary market is expected to help in this direction, gradually increasing the dispersion of new issues and enhancing popular interest in them. Besides promoting investing interest among domestic and foreign institutional investors, the new market should also prove a new source of revenues for stockbrokerages. Through SAT, investors will now be able to monitor their total portfolio, including stocks, corporate bonds and government securities. The system has been designed to clear bond transactions on the following day, compared to three days for clearing stock transactions. This differentiation was incorporated to enable the retail bond market to be synchronized with the Bank of Greece’s wholesale secondary bond market.

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