The Luxembourg Stock Exchange managed in 2010 to regain market share, lost during the first months of the crisis, in its traditional operations related to the listing of securities. It also pursued a policy geared to diversifying its products and services, particularly those regarding the processing and dissemination of financial data. Together with its subsidiary Finesti, it carried out several initiatives on this front to enable participants of the financial centre to meet the requirements of the legal and regulatory framework.
During 2010, the Luxembourg Stock Exchange undertook an active communication policy aimed at the country’s socio-economic and political circles. This approach reflects the determination of the Exchange to raise awareness of decision-makers of the financial centre as regards its activities and plans, as well as regarding certain regulatory issues at the national and European level.
Recovery of listing activities
In 2010, the Luxembourg Stock Exchange improved its position overall in the listing of international securities. During the course of the year, it admitted 9,350 new securities, compared with 7,737 in 2009, a 20.85% increase. This positive trend concerned the bond and warrant segments in particular.
For its two markets, the breakdown was as follows: 8,210 securities were admitted to trading on the “Bourse de Luxembourg” regulated market, and 1,140 on the Euro MTF market. In terms of types of instruments, the newly admitted securities were 5,608 bonds, 1,220 investment funds, 53 shares and depositary receipts, and 2,469 warrants.
As regards the share segment, the overwhelming majority of the listed instruments were global depositary receipts, essentially from India and Taiwan. The Stock Exchange has acquired a predominant position in this segment in which it has long played a pioneering role; the first global depositary receipt was listed in Luxembourg twenty years ago, in December 1990.
On 31 December 2010, the Luxembourg Stock Exchange had a total of 44,916 quotation lines compared with 45,660 in 2009, a 1.63% drop. Bonds and warrants are still the most important segments, with 29,566 and 7,581 lines respectively.
This renewed dynamism in listing activities is in line with an overall recovery and can also be explained by the proactive policy pursued by the Luxembourg Stock Exchange.
Market activities
The Luxembourg Stock Exchange, which operates on the UTP platform of the NYSE Euronext, pursues an active policy to attract new actors to its market. It market was entirely automated fifteen years ago, putting an end to the floor system which had been traditionally used to trade securities.
On 31 December 2010, the global volume of transactions on the Luxembourg Stock Exchange reached €219.16 million. Share trading volumes accounted for 74.99%, or EUR 164.35 million in absolute terms, while volume on fixed-income securities amounted to 25.01% or EUR 54.81 million.
LuxX: Up for the year
The LuxX closed the year at 1,542.12 points, up 12.44% compared with 2009. The highest level was reached on 7 April 2010 (1,620.06 points), and the lowest on 20 May 2010 (1,327.41 points). The performance of LuxX is in line with the trend for European stock exchanges during the course of 2010.
Secondary market: Liquidity and transparency of the bond segment
Activity on the bond segment through continuous trading is making headway inasmuch as more than one thousand bonds are currently tradable in continuous trading. This mode of trading for bonds is driven by market makers who offer executable prices during the entire trading session. This activity in the bond market is part of a development strategy aimed at increasing liquidity and transparency.
Regulation: Implementation of a compliance policy and charter
On 16 July 2010, the board of directors of the Luxembourg Stock Exchange adopted a compliance policy and charter.
The purpose of the compliance policy is to promote honest and responsible conduct and to guarantee compliance with the regulations in force in the company. Against this background, the compliance charter is a key element for the implementation of the compliance policy. More specifically, the compliance charter defines, in a clear and precise manner, the legal and regulatory framework of the missions and responsibilities of the compliance function.
Dissemination services: Notices and the OAM service
On 22 November 2010, the service for notices service surpassed the 20,000 mark of notices published on the website of the Luxembourg Stock Exchange (www.bourse.lu).
This service is at the disposal of all issuers whose securities are admitted on one of the markets operated by the Luxembourg Stock Exchange. It enables them to meet the regulatory requirements that govern the timeframes for the transmission of sensitive information to the supervisory authorities.
Published on the site of the Stock Exchange, all these notices are also published in the international media.
A supplement to the range of dissemination services offered by the Luxembourg market operator, this official notice publication service also guarantees the necessary transparency of the Luxembourg markets and the securities listed thereon.
Furthermore, the OAM service was enhanced on 13 December 2010. The OAM (Officially Appointed Mechanism) service enables the issuers concerned by the law of 11 January 2008 relating to transparency obligations to meet the fundamental provisions of that piece of legislation.
Nearly 300 filing entities representing some 500 issuers use the OAM service of the Luxembourg Stock Exchange at this time.
E-file: Official channel for the transmission of Long Form Reports and Management Letters
As a result of CSSF Circular 10/457, the e-file.lu secure communication platform of the Luxembourg Stock Exchange and its subsidiary, Finesti, has been designated an official channel for the electronic transmission of Long Form Reports and Management Letters.
This circular was sent on 10 May 2010 to credit institutions and investment companies under Luxembourg law, as well as subsidiaries of non-EU credit institutions and investment companies.
E-file.lu was already assigned a similar task for the routing of regulated documents concerning undertakings for collective investment and specialised investment funds by virtue of CSSF Circular 08/371 of 5 September 2008.
Meetings with the country’s politicians and government officials
The Luxembourg Stock Exchange intensified its programme of meetings with representatives of the country’s governmental and political authorities in the course of 2010. Against this background, the Luxembourg Stock Exchange received the president and members of the Council of State on 27 September 2010. It received Laurent Mosar, speaker of the Chamber of Deputies of Luxembourg on 4 October 2010, as well as a delegation from the Ministry of Foreign Affairs on 21 October 2010.
The Luxembourg Stock Exchange had received two parliamentary delegations already in the first half of the year, namely a delegation of Luxembourg MEPs on 26 February, and a delegation from the Budget and Finance Committee of the Chamber of Deputies on 27 April 2010.
Stock Exchange officials presented the activities of the Luxembourg Stock Exchange and its subsidiary Finesti during these visits. The current efforts and plans of the Luxembourg Stock Exchange and Finesti served as a backdrop for the exchanges that took place during the meetings with these delegations.
The Luxembourg Stock Exchange also had a number of meetings in Brussels with members of the European Parliament and with Michel Barnier, European commissioner for Internal Market and Services. These meetings are part of close monitoring that the Luxembourg Stock Exchange carries out of the European regulatory framework, particularly the revision of Markets in Financial Instruments Directive (MiFID).
Stock Exchange Day 2010 and promotional actions
The annual Stock Exchange Day on 4 March 2010 attracted a record number of participants. Nearly only thousand people attended this event, which was held at the new Kirchberg Conference Centre and at which Luc Frieden, minister of finance, delivered a speech entitled “Luxembourg in the G20 era.”
Additionally, the Luxembourg Stock Exchange took an active role in seminars, conferences and other events held throughout 2010 to promote the financial center. The Luxemburg Stock Exchange participated in several missions organised by the promotion agency LuxembourgforFinance and in various promotional activities.
The Luxembourg Stock Exchange welcomed several delegations of professionals from international finance in emerging countries, particularly from India and China.
The Luxembourg Stock Exchange and its subsidiary Finesti also sponsored the Lipper Fund Awards ceremony held on 24 March 2010 in Luxembourg. The purpose of these awards is to honour funds that put in the best performance at national level.
Finally, a founding member of the Federation of European Securities Exchanges (FESE), the Stock Exchange took part in meetings and works initiated by this federation throughout 2010.