Small investors in Denmark can now make a personal contribution to the further dematerialisation of the securities markets by opting not to receive notification of changes when bonds are drawn.
An amendment to the Danish securities legislation – taken at the initiative of the Danish Minister for Economic and Business Affairs, Bendt Bendtsen – means that the Danish CSD, VP Securities Services (VP), has developed a new system in which it is optional to receive the notifications. VP says the notifications can cost investors more than the sum of money drawn.
According to the new legislation, the notifications of changes when bonds are drawn will be equal to notifications of change, which are optional. This means that the owners of bonds can choose not to receive a notification of drawing. “This way, the investors save irritating paper and the disproportionate costs of distributing notifications, which is particularly relevant to the drawing of small bond holdings,” says a spokesman for the VP.
The problem in connection with the disproportionate costs for small investors arose after the introduction of mathematical redemption in 2001.
In the light of the new legislation, VP, who book-enters all securities holdings, has developed an automatic system, which makes it easier for the banks to administrate the notifications.
“The system is in operation, but it is up to the investors to point out to their banks that they no longer wish to receive the investor notifications,” says VP’s President & CEO Johannes Luef.
The new legislation opens up scope for further simplification. Stage 2, making it possible to choose not to receive the remaining investor notifications, is expected to be introduced at the turn of the year.