PARIS (Reuters) - The 20-minute "flash crash" will reverberate for quite some time to come. For years, America's stock markets were the envy of the world, the model for modern trading -- fast, stable, efficient and for the most part transparent.
But after the Dow Jones industrial average plunged nearly 700 points on May 6 before sharply rebounding, that perception changed, possibly for good.
For WFE, the year 2010 is a memorable year: it is the 50th anniversary year of the Federation. For Shanghai (SSE) and Shenzhen Stock Exchange (SZSE), two exchanges in China, the year 2010 is also a memorable year. Two months from now, it will be the 20th anniversary of the founding of the Shanghai and Shenzhen Stock Exchanges.
An initial public offering can change a company. Many in the media seemed certain that if we went public, the Google ethos wouldn’t survive. People predicted that we would suddenly be divided into haves and have-nots on the basis of how many shares of Google stock each of us held. The talent would cash out and quit. A new focus on pleasing Wall Street would cause us to lose our prized objectivity and independence.
The wake of corporate failures in the early part of the decade and the subsequent economic crisis, which for many countries and industries is still not something of the past, resulted in a flurry of new laws and rules by legislatures and regulators. The intention of such reforms is clearly to enhance public protection, and ultimately the sustainability of corporations, economies and nations.
An exchange used to be a place – yes, a physical place -- where people would come together to buy or sell, hoping to achieve the best price for themselves. The more the exchange was able to attract all of the buy and sell interests in a product, the more the prices on the exchange would reflect the truestate of supply and demand.
Traditionally exchanges have been monopolies. They were owned by their members, blessed by governments, and acted like utilities. The cost of building a market center, developing a network, and gaining critical mass virtually ensured an exchange’s success. The more liquidity an exchange attracted, the more critical it was to trade there. This created a virtuous cycle where the big got bigger and the small became irrelevant. For decades this allowed larger exchanges to operate virtually unopposed, as they may as well have carved the adage “Where Liquidity Begets Liquidity” on their marble cornerstone.
It is clear that there is increasing appetite for Africa as an investment destination. Both investment flows into the continent’s markets and the number of funds focused on the region are increasing as low yields in developed countries prompt investors to search for high returns in previously unexplored emerging markets. This is good news for the continent.
The old economic order, the recent financial crisis showed, was not sustainable. Developed countries were living beyond their means, and risk management measures across the financial chain with limited exceptions were inadequate to prevent the situation from worsening and eventually resulting in a systemic collapse that affected all of us.
believe that as an industry, we must act together to grasp this opportunity to reshape our economy towards a far more sustainable footing, based on the key characteristics of exchange trading: transparency, neutrality and liquidity. From my conversations with political leaders in London, Brussels and Washington I believe that there is recognition at the highest levels that this was not a crisis of equity or exchange trading.
Much has been said of the need for greater cross-market cooperation between regulators in light of recent events. Whilst this is not a new issue, it has been given greater focus since the financial crisis that led to a number of governments around the world providing financial support to key institutions. Furthermore with debate raging in both the US and Europe over the extent to which markets