WFE chairman urges greater coordination, cooperation among international regulators at their annual meeting

WFE chairman urges greater coordination, cooperation among international regulators at their annual meeting

TEL AVIV, Israel (June 11, 2009) – The Chairman of the World Federation of Exchanges (WFE) today urged international regulators at their annual meeting to work toward greater coordination and cooperation as nations reform and restructure their oversight of financial markets, institutions and products.

William J. Brodsky, Chairman of the WFE and Chairman and CEO of the Chicago Board Options Exchange (CBOE), participated in the 34th annual conference of the International Organization of Securities Commissions (IOSCO) in a discussion of “improving the role of securities regulators in a changing global financial system.”

“The current crisis has underscored the time-tested benefits of regulated exchanges; WFE’s collective experience is an especially valuable resource at this critical juncture in the evolution of our global markets,” Mr. Brodsky said. “WFE remains committed to sharing its front-line experience with international regulators and governing bodies.” 

The WFE Chairman outlined WFE’s positions on three critical regulatory issues under discussion by IOSCO participants: short selling, circuit breakers and clearing of over-the-counter derivatives.  

“We cannot meaningfully address the issue of rebuilding investor confidence with simplistic political remedies to complex market issues,” Mr. Brodsky said. “Our common goal should be to curb abusive practices without undermining the benefits of legitimate short selling.” 

On the issue of circuit breakers, he urged regulators to avoid “ad hoc trading halts” of markets, such as those which were imposed in some countries in 2008, and to work to “clarify the use of circuit breakers in volatile markets. It is important to ensure that circuit breakers are pre-determined, predictable and temporary so that customers can have clear expectations as to when they will occur and when they will be lifted.” 

On the issue of over-the-counter derivatives, Mr. Brodsky said it is widely recognized that some OTC products must be standardized  and cleared through central clearing parties in order to minimize systemic risk, “Perhaps less understood is that a key aspect of centralized clearing is the setting of appropriate margins – OTC products must be marked to market in an objective and appropriate way  in order to be effectively margined,” he said. “Exchange trading of products that are complementary to OTC products can facilitate or ameliorate the formation of a more liquid market price. By providing the means for greater participation in similar products, exchange-based markets help reduce systemic risk.” 

In conclusion, Mr. Brodsky said: “I would like to stress that regulation is about fairness of opportunity in the market, not about encouraging movement up or down.  We are neutral on market direction and regulation and rules should be, too.  While there may always be disagreement in how best to design a new regulatory framework, it must include greater international cooperation in order to address the needs of the global marketplace, of which we are all a part.   Although an annual event, this conference could not be more timely and appropriate. This is a unique opportunity to work together in an ever shrinking, technologically connected world to find common ground and to reduce regulatory arbitrage for the benefit of all investors.” 


The World Federation of Exchanges, based in Paris, France, is the trade association of more than 50 publicly regulated stock, futures and options exchanges. WFE conducts research on issues pertinent to its members and holds workshops and conferences around the world. WFE market operators are responsible for the functioning of key components in the financial world. WFE exchanges are home to over 46,000 listed companies (as of 30 September 2008). 

At the end of 2008:

·         The total market capitalization listed companies was approximately USD 33 trillion.

·         Approximately USD 113 trillion in equities were traded on WFE stock exchanges.

·         More than 17 billion future and option contracts were transparently traded on-exchange, with proper post trade risk management and guarantees.  

Media Contacts:

·         WFE: Peter Clifford, +33 (0) 1 58 62 54 01,; +33 (0) 1 58 62 54 00 Sibel Yilmaz    

·         CBOE: Carol Kennedy, (312) 786-7323, 

·         Intermarket Communications: Andrew Yemma, 212-754-5450, or Stephanie DiIorio, 212-754-5181,