Canada’s equity market has a history of respecting the role played by retail clients in the price discovery process. Although rules have been in place for some time that aim to preserve liquidity on Canadian equity exchanges, the creation of dark pools and dark order functionality has chipped away at the protection provided by these rules. Recent proposals address gaps in the rules that have allowed order flow to migrate away from lit marketplaces. This article can serve as a guide to those in other jurisdictions who wage the battle against internalization. For this purpose, the following information is provided:
Exchanges in their current form can be traced back to Amsterdam, with the creation of an exchange to trade shares in the Dutch East India Company. An in 1652, it was this very company that established a trading post in the shadow of Table Mountain, changing the course of South African history, for better and for worse.
The World Federation of Exchanges is an association of excellence. Included, of course, is the Johannesburg Stock Exchange which in the latest global competitiveness report of the World Economic Forum, was once again placed first in terms of market regulation. In this context of excellence it is indeed an honour that the WFE should make me the recipient of an Award of Excellence in recognition of the work I have done in leading national commissions on Corporate Governance, especially the South African commission, and for driving forward integrated reporting which is better suited to the changed world in which we live. I acknowledge the role of the many I have led in the various commissions, the GRI and the IIRC in promoting the ideal of integrated reporting.
Transparency used to be for a very limited group. In the old world, the public never saw the limit order book. The best that traders and investors could see was the last trade, and they might be told the current bid and ask in the pit. Of course, specialists at stock exchanges held the order books for their stocks, which meant that they were the only market participants who could see them. Big floor brokers in the futures markets would see the portion of the order book created by their own customers’ orders, so again they had an exclusive view of at least the piece of the order book for the futures contracts they filled orders for.
Over the past years, high-frequency trading has progressively gained a foothold in financial markets, enabled and driven by an interplay of legislative measures, increased competition between execution venues and significant advances in information technology.
High Frequency Traders, or HFTs for short, are at the eye of the regulatory storm that has unfolded post the 2007-2009 financial crisis. Fuelled by the Flash Crash on the 6 May 2010 in the USA as well as the upcoming revision of MiFID in Europe, opinions about this relatively new class of market participants are being put forward at a staggering pace. But what are the facts we should take into account before we make opinions about how to regulate or consciously not regulate HFTs?
On March 11, 2011, the north-east region of Japan was struck by disaster on three fronts. The Great East Japan Earthquake was the most powerful to have hit Japan in its long history. The tremors subsequently triggered an extremely destructive tsunami, with the combined force causing severe and extensive structural damage along the coast and areas further inland. These damages resulted in problems at the Fukushima Daiichi Nuclear Power Plant, where radiological issues persist.
Islamic finance industry has registered a tremendous growth during the last decade in both Islamic and non-Islamic countries. While the asset size of Islamic finance reached USD 1.2 trillion in 2010 over 80 countries, the banking industry takes the largest share of 80 %. The recent financial crisis in 2008-2009 revealed more the importance of Islamic finance as the conventional banking system encountered serious problems. This gave pace the widespread use and acceptance of asset based/backed Islamic financial instruments in non-Islamic countries like UK, France, USA, either through Islamic financial institutions or Islamic windows of the conventional banks.
Modern Islamic financial markets began their journey with the establishment of interest-free banking practices. But while Islamic banking served its purpose, markets began looking for alternative solutions for fund raising and insurance through Islamic finance a decade later. Today, Islamic financial markets have flourished throughout the Middle East, Europe and Asia, with assets of approximately US$1 trillion[i] and the industry is expected to grow at an annual rate of 25 percent.[ii]
As exchanges were created, they adopted the technology of the time. Early on, the technology available was relatively primitive. The first stock exchange began in Amsterdam in 1603. And the earliest modern futures exchanges began in the 1860s. In those years, the human voice was the main mechanism for executing a trade. Pen and paper were the tools used to record trades. And chalk and chalk boards were the basic technology to display quotes.