09 December 2003: The SVTs (Primary dealers in French government securities) as seen by investors

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The survey

Agence France Trésor and AMTE (Euro-denominated Interest Rate Market Association) have recently committed IEM-Finance to measure the quality of the commercial relationship between holders of French Government debt and the primary dealers in French Government securities (SVTs). There were two aims in this survey:
- To better know the main players' opinion on the functioning of the French government securities market;
- to measure the quality of the commercial relationship of intermediaries, in view of establishing the SVT League Table for 2003. The League Table, to be published early in 2004, will be based on qualitative data, along with performance on both the primary and secondary markets.

The survey was carried out among a sample (over 1,000 names) of owners of French government securities, the names of whom were provided by the SVTs. Questions were sent to 507 individuals, with a response rate of 32.7%. Geographically, the answers were more or less distributed along the same lines as those of French sovereign securities owners over the world.


Results concerning the SVTs as a group

All the SVTs were commended by their clients for the quality of their pricing, their respect for confidentiality and compliance. Information on OATs (bonds of 10-year maturity or more) was singled out for praise, while that for BTFs (short term bills), repos, TEC 10 OATS (variable rate bonds) and stripped bonds could still be improved. In general they found that back office service was satisfactory.

Investors and SVTs deal by e-mail or telephone. Most investors prefer that the SVT call him about a precise point and that the same person who gives him a piece of advice should also enter the trade that he or she advised.

The personal relationship between the investor and his SVT is considered very important. About 30% of those surveyed had met a member of Agence France Trésor during the twelve months preceding the survey. Almost all respondents deemed the functioning of the French government securities market satisfactory.


Guidelines to the choice of an intermediary

When asked along which guidelines they select their intermediary, the surveyed primarily stressed the importance of being a SVT and having a good rating. The clients also consider research as an important criterion, and the back-office as well. They rather have their SVT operate the back office rather entrust it to a subcontractor. However, the position on the various League Table of market operators (among which that of AFT) is not considered essential, neither is a location in Paris.

Euro Debt Market Association (AMTE) is a forum created in June 2002 by the various players on the euro-denominated fixed income market, to exchange views. It currently groups about forty members in four sections:
- issuers, among whom, sovereign borrowers, agencies and supra-national borrowers, frequent borrowers and asset-backed bond issuers;
- Financial intermediaries including primary dealers for the main euro-denominated bond issuers;
- Final investors in euro;
- Other players including electronic trading platforms, brokers, netting organizations, professional associations, market authorities, rating agencies, law firms etc.

Valérie Blanchin
[email protected]
06 23 13 31 81

François Naudin
[email protected]
01 40 04 15 50