UNIDADES FORMATIVAS
B) DESARROLLO DE UNIDADES FORMATIVAS
Apart from the placement of the OLOs and Treasury certificates on the primary market, the primary dealers have the task of ensuring price transparency of these products on secondary markets. This partly consists in continuously quoting prices compliant with the market, which in concrete terms means the primary dealers must display bid/offer prices on an electronic interdealer platform with a defined maximum spread and for a certain minimum amount. This applies to all benchmark bonds and also to some other non- benchmark products. Up until April 2008, the primary dealers fulfilled this market making requirement for OLOs and Treasury certificates on a single electronic interdealer platform, MTS Belgium.
As from the month of April 2008, the primary dealers were able to fulfil their quoting obligations on one or more of the three different electronic interdealer platforms they selected which were accepted by the Treasury.
This new possibility is the result of a combination of factors:
- On the one hand, the primary dealers wanted to be able to fulfil their quoting obligations on electronic platforms other than MTS.
- On the other hand, the technical progress achieved in this field made it possible to simultaneously display the prices on different platforms, consolidate them and conclude transactions on these platforms.
The three platforms on which the 16 primary dealers can carry out their quotes, i.e. BGC Brokers, BrokerTec and MTS Belgium, were chosen by the primary dealers starting from a group of different candidates required to satisfy strict selection criteria.
Since the primary dealers can now choose between different electronic platforms, it is the Treasury's responsibility to ensure the quoting obligations are fulfilled. For this purpose the Treasury has developed an efficient high performance in-house software enabling it to inform each primary dealer individually on a daily basis as to its quoting obligations. In this way the primary dealer knows if it has fulfilled its obligations, or even possibly given a better quote than was required.
The impact of the liquidity crisis on the banks' balance sheets has also had an impact on the volumes handled on the electronic interdealer platforms. In difficult market conditions, the obligations to quote on these platforms can indeed result in undesired posi-
: : ANNUAL REPOR T 2008 : : T ABLE OF CONTENTS FOREWORD THE KEY INDICA T ORS 2008 P A R T 1 P A R T 2 PA R T 3 APPENDICES
tions being taken in the books. As a result, from September to December the primary dealers reduced the OLO volumes negotiated on the electronic platforms by 88% compared to the previous year. As for the Treasury certificates, the archetypal secure product, the reduction is not as pronounced since it only amounts to 10%.
Another consequence of the considerable volatility of the markets was that quoting of OLOs and Treasury certificates within the limits imposed in terms of spreads became impossible. From mid-September onwards, instead of a system of maximum imposed spreads, a system of "exceptional market circumstances" was implemented, in which the primary dealers quote bid/offer spreads as best they can. Measurement of the appreciation of the quotes is based on the average quoted bid/offer spread, instead of the maximum imposed spread. In this way, even in periods when the markets are extremely volatile, there were sufficient quotations to guarantee price transparency. This new calculation method also makes it possible in better periods to obtain narrower bid/offer spreads. The primary dealers' bid/offer spreads are compared for their evaluation with the average bid/offer spreads from all the primary dealers.
To date, the addition of two new electronic interdealer platforms has not yet had a great impact on the way in which primary dealers quote. Between 1st April and 31st December 2008, more than 95% of the volume was still handled on MTS Belgium. It should be noted that at present 6 primary dealers carry out their quotes exclusively or occasionally on a platform other than MTS Belgium.
However it would be premature and incorrect to conclude from this that the opening of other interdealer platforms was unnecessary. It would be premature since the severity of the crisis experienced by the markets since mid-September has kept the market makers extremely busy, certainly representing a hindrance to the use of new platforms. It would be
incorrect since the access to new electronic platforms represented a safety net for satisfactory operation of market making, in the event the existing platform were to encounter problems subsequent to the crisis.
4. Implementation of the double-
entry general ledger accounting
system for Belgian Federal
government debt.
The Federal government's accounting system is currently going through a phase of fundamental transformation, announced some time ago in particular by the law of 15th March 1991 concerning the reform of the State's general ledger accounting and provincial accounting, and specified by the law of 22nd May 2003 concerning organisation of the Federal government's budget and accounting system. This law lays down the principle and specifies the fundamental practicalities of parallel book-keeping of double entry general ledger accounting and budget accounting, in which these two accounting systems are defined in terms of accruals referring to a specific standardised chart of accounts. The reform of the Federal government's accounting called the FEDCOM reform, managed by an inter-ministerial working group, is gradually being put in place and is currently aiming, after implementation of four pilot departments and the Treasury with respect to cash management, to set up a group of five ministerial departments. Given the indisputable greater value of double entry accounting in terms of image and accounting, financial and asset information compared to the current "cash" accounting, particularly in the specific field of debt management, the Federal State's debt service undertook in 2008 to set up the accounting reform, thereby anticipating the schedule drawn up by "FEDCOM". This initiative is also based on the considerable potential for automation in the production of accounting entries, due to the close complementarity between the debt database and the accounting software. The project developed for debt is mainly focused on double entry accounting and includes an interface that will allow budget data to be integrated into the "FEDCOM" system.
: : ANNUAL REPOR T 2008 : : T ABLE OF CONTENTS FOREWORD THE KEY INDICA T ORS 2008 P A R T 1 P A R T 2 PA R T 3 APPENDICES
The contract for acquisition of the accounting software and the consulting services necessary to put it into operation was signed in December 2007. Although the groundwork had been carried out regarding the inventory of accounting entries and the analysis work to define the accounting rules for each product and each operation, the computer work to configure these rules began in January 2008. The accounting rules for debt operations in euros, excluding derivative products, were developed, tested and put into production during 2008. 2009 will be devoted to putting into production debt operations in foreign currencies and derivative products, as well as adjustment of accounts reporting and constitution of the balance sheet starting on 31st December 2009. According to the objective set, the new accounting should be operational at the start of 2010.
The general ledger double entry accounting system currently being put in place at the Debt Service refers to the law of 17th July 1975 relating to corporate accounting, and also takes account of specificities pertaining to government and the international regulatory frameworks that govern national accounts. Therefore the Debt Service will produce a set of accounts in a form similar to that stipulated by provisions for corporate accounting and will draw up a balance sheet and income statement that will eventually be integrated into the Federal government's overall accounting statements. However, the Federal government's standardised chart of accounts differs in several respects from the corporate chart of accounts, and the allocation rules for the new public accounting system are broadly aligned with the standards in the European System of Integrated Economic Accounts in its 1995 version (ESA 95) and on the rules defined in the framework of application of the protocol for the procedure concerning excessive deficits, attached as an appendix to the treaty instituting the European Community.