Starting today, the Vienna Stock Exchange enlarges bond trading with electronic continuous trading that will include all 21 Austrian fixed-interest government bonds and one bond with variable interest issued by the Republic of Austria. Up to now, trading in government bonds took place in a one-time intraday auction. In the future, trading members and investors on the Vienna Stock Exchange will benefit from a more transparent and liquid market for Austrian government bonds.
“Presently, most government bonds and corporate bonds are traded over the counter - this means manual trading and a lack of transparency for trading members and investors. With the introduction of continuous trading and market making, trading in government bonds on the exchange now stands for the highest possible level of transparency and security,” stressed Birgit Kuras, member of the Management Board of Wiener Börse AG.
Trading members, data vendors and interested private investors can obtain an ongoing view of trading and current prices via the market data-feed and website of the Vienna Stock Exchange. The best buy and sell orders are displayed to the public in the profiles of the securities. At the end of a trading day, a valuation which serves as a reference price is published – even if no trades were executed. The clearing and settlement of trades is done by Central Counterparty Austria - CCP.A. The collateral requirements and the sophisticated risk management system for exchange trading significantly lower the risk exposure for trading members, compared to OTC trading.
Trading hours run from 9:00 a.m. to 5:30 p.m. Exchange orders, which queued up for execution, can be executed more quickly now thanks to the liquidity providers. Market makers guarantee continuous trading securities. While on German exchanges the quotes entered are not binding, market makers on the Vienna Stock Exchange help to create additional liquidity and better quality prices by entering binding buy and sell orders. The first two market makers for the government bonds are the German brokers Walter Ludwig Wertpapierhandelsbank GmbH and Baader Bank AG. The multi-market-making system of the Vienna Stock Exchange is based on competition. All trading members of the Vienna Stock Exchange have the possibility of assuming the role of liquidity provider. Same as in the stock trading, the Vienna Stock Exchange continuously monitors the activities of the market makers.
Impact on investors: Exchange trading will lead to highest transparency and security standards to the government bond trading. Moreover, fixed quotes of market makers will improve liquidity and price quality in bond trading.