Vrdipapircentralen (VP), the Danish CSD, saw record turnover in bonds last year, but its CEO foresees a revival of interest in equities in the year ahead.
“The increasingly popular non-callable adjustable-rate loans and the launch of annuity loans with deferred amortisation or amortisation breaks have had a significant impact on refinancing of mortgage loans and thereby also the turnover of bonds, which set record in 2003 by reaching DKK 31,000 billion,” says President and CEO Johannes Luef, VP Securities Services. “Private investors are regaining faith in shares. In 2003 the turnover of shares rose 19 percent compared to 2002 and the main part of this rise is due to the private investors.”
The turnover of bonds book-entered in VP set new record in 2003. The turnover amounted to DKK 31,056 billion corresponding to DKK 125 billion per business day. This is a rise of 9 percent and an all time high record. The previous record of DKK 28,555 billion was set in 2002. On 2 January 2004, a new record was set as the turnover of bonds hit DKK 460 billion.
In 2003, 62 per cent of the turnover of bonds was effected between just two securities dealers, the balance being executed mainly between securities dealers and their customers.
At the end of 2003, a total of 2,289 bond series were issued through VP compared to 2,240 at the end of 2002. This equals a nominal value of bonds in circulation of DKK 2,447 billion at the end of 2003, compared to DKK 2,106 billion at the end of 2002.
The turnover of shares and unit trust certificates book-entered in VP also set record in 2003. The nominal turnover of shares in 2003 was DKK 397 billion corresponding to DKK 1.6 billion per business day. This is a rise of 19 percent compared to 2002. The previous record of DKK 340 billion was set in 2000. Since the middle of the 1990’s, the turnover of shares has more than quadrupled.
In Denmark, the turnover of shares is primarily effected between securities dealers and their customers. Only 16 per cent of the 2003 turnover took place between the securities dealers themselves. This percentage has decreased significantly in recent years and reflects the growing interest among private and institutional investors in long term share investment.
At the end of 2003, a total of 827 share series were issued through VP compared to 821 at the end of 2002. This equals a nominal value of DKK 344 billion, compared to DKK 289 billion in 2002.
Trade transactions settled in VP totalled 6.2 million in 2003 – an increase of 12 percent compared to 2002. The transactions are distributed with 4.6 million share transactions and 1.6 million bond transactions.
VP’s turnover is calculated as the nominal value of the securities holdings that were transferred from one account to another in the VP Book-Entry System during the year. Such transfers relate not only to securities trades but also to securities that have been transferred, e.g. in connection with repo-based lending schemes or collateralisations.