Institutional warning: Dutch pension fund reforms may potentially disrupt the bond market.

ABN Amro Bank NV's fixed income trading manager Arif Kallan warned that the collapse of the long-term interest rate hedging demand from some major European buyers could trigger turbulence in the bond market. The pension fund industry in the Netherlands is transitioning to a fixed contribution model rather than fixed income. Although this is a gradual process, it is still expected to cause disruptions around those key trading dates. "We expect significant volatility around the transition dates... I have been involved in Euro interest rate swap trading for nearly 15 years, and the imbalance in supply and demand in the long-term market is very serious."