6

Secondary market developments

It is a priority for the State Treasury to actively work with the Primary Dealers to maintain and further enhance the liquidity of the Finnish government bonds.

Finnish government benchmark bonds can be traded on the following inter-dealer platforms: MTS Finland, BGC eSpeed, and ICAP BrokerTec. The State Treasury does not participate in secondary market activity, and the inter-dealer trading is based on the activity of the Primary Dealers and other market participants. In 2017 the nominal interdealer trading volume remained largely unchanged in comparison to the previous year.

Bond spreads to Germany Bond spreads to Germany Zoom

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Bond spreads to Germany(Bonds maturing in 2026)020406080100DecNovOctSepAugJulJunMayAprMarFebJanSource: BloombergBasis pointsFranceBelgiumAustriaNetherlandsFranceBelgiumAustriaNetherlandsFinland
RFGB bid-offer spreads Zoom RFGB bid-offer spreads graph

The State Treasury actively follows the Primary Dealer quoting activity in the secondary markets. There are guidelines for the Primary Dealers on quoting for different maturities in the interdealer market, where the bid-offer spread of the price quotes is observed and tracked. The average bid-offer spread of all the market makers is calculated and each Primary Dealer benchmarked against the average. On a weekly basis, the State Treasury reports the analysed spread data for the benchmark bond quotes back to the individual Primary Dealer banks. The bid-offer spreads in the interdealer and customer market segments tightened in 2017 and remained in line with peer sovereign countries.

Monthly secondary market volumes of Finnish governments bonds Zoom Monthly secondary market volumes of Finnish governments bonds

Primary dealers report customer trade volumes to the State Treasury within the Euro Market Activity Reporting (EMAR). The reporting takes place on a monthly basis, and the data is consolidated and used for monitoring and analysing. The EMAR data shows that in 2017 the secondary market customer trade volumes remained at a level similar to that of 2016. The turnover volume (sales and purchases) amounted to approximately EUR 7 billion per month on average, which means that around 10 per cent of the euro benchmark outstanding stock was traded every month.

Primary dealers 2018 Primary dealers graph Zoom

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Primary dealers 2018