Enhanced debt securities trading model to be launched in Riga and Tallinn

28.07.2005 RIG

Starting with August 1, 2005, the trading system in Riga and Tallinn stock exchanges will be complemented by a new market segment for debt securities. The orders will be matched automatically according to yield to maturity specified in the buy or sell orders. The model is already operational at the Vilnius Stock Exchange. The launch of the automatch submarket for debt securities in the Riga and Tallinn stock exchanges is another step in harmonization of the cash markets in the Baltics.

The new model will facilitate the order input for the brokers: to trade with debt securities, they will have to indicate yield to maturity in buy or sell orders, and the orders will be automatched according to the yields. As previously, the brokers will have to specify the nominal value of securities in the orders. The new model may be applied for trading of short-term debt securities and fixed rate long-term debt securities.

The new model will operate alongside with the existing one, where the orders are not matched automatically, and the price has to be quoted in percentage of nominal, including accrued income (the so-called “dirty price). The trading of debt securities with variable rate and contract deals with non-standard settlement date will be possible only in the previous model.

The launch of the new market segment on August 1, 2005 will involve the changes of debt securities trading codes in the Baltic markets. The debt securities traded in the automatch segment will have a code built of 11 symbols, for example, LVGB038706A, where LVG stands for the issuer, namely, Latvian Government debt security; B – long-term debt security; 0387 – fixed income security with coupon rate 3.87%; 06 – maturity in 2006; A – securities series. The trading code of debt securities not traded in automatch segment will be built of 12 symbols – the 11th symbol will be followed by letter “B” (stands for “bulletin board” principle) – for example, LVGB038706AB.

For more information, please contact:
Inese Purgaile, Corporate Communications Specialist
Riga Stock Exchange
Phone: +371 7212431