WFE Annual Meeting 2024: the WFE convenes Exchange industry at Bursa Malaysia in Kuala Lumpur

 

CONFERENCE RECAP

WFE Annual Meeting 2024: the WFE convenes Exchange industry at Bursa Malaysia in Kuala Lumpur

London, 28 November 2024 – Last week the World Federation of Exchanges (the WFE), the global industry group for exchanges and Central Clearing Counterparties (CCPs), convened industry leaders from exchanges, policymakers and buy-side for its 63^rd General Assembly and Annual Meeting, hosted by Bursa Malaysia in Kuala Lumpur.

Discussions focused on the direction of the exchange industry and how we seize the opportunities and challenges we face. Day one consisted of a joint dialogue with key international and regional regulators. Along with holding our General Assembly, the following two days featured academic presentations, panels, fireside chats and keynote speeches.

Key highlights from Day 1 include:

We held a joint dialogue between WFE members and the Securities Commission Malaysia. Attended by over 100 senior regulators, including the Monetary Authority of Singapore, the Securities and Exchange Commission of Thailand, and Dubai Financial Services Authority, as well as exchange leaders from TMX Group, Luxembourg Stock Exchange, Bolsa Mexicana de Valores, Bourse de Casablanca, Ghana Stock Exchange, The Egyptian Exchange, CME Group and Nasdaq. The dialogue addressed emerging issues and promoted stronger collaboration in global capital markets.

We focused on three pivotal areas: the interplay between private and public markets; the roles of regulators and exchanges in advancing sustainable finance; and the impact of emerging technologies on market structure.

The dialogue was co-chaired by John McKenzie, WFE Working Committee Chair and CEO of TMX Group, and Dato’ Mohammad Faiz Azmi, Chairman, Securities Commission Malaysia (SCM). 

The SCM Chairman said, “The profound changes in the capital markets ecosystem demand new ways of thinking and acting, both from regulators and exchanges. As frontline regulators, exchanges play a vital role in ensuring fair, efficient, and transparent markets—foundations upon which resilient, inclusive, and sustainable financial systems are built.”

Key highlights from Day 2 include:

The WFE held its 63rd General Assembly, in which seven Directors of the Board were elected for a three-year term, as follows:

• Gilson Finkelsztain, CEO, B3
• Korkmaz Ergun, CEO, Borsa Istanbul
• Carlson Tong, Chairman, Hong Kong Exchanges & Clearing (HKEX)
• Julie Becker, CEO, Luxembourg Stock Exchange
• Ed Knight, Executive Vice Chairman, Nasdaq
• Ashishkumar Chauhan, Managing Director & CEO, National Stock Exchange of India Ltd
• Khalid Al Hussan, CEO, Saudi Tadawul Group (STG)

Opening the conference, Nandini Sukumar, CEO of the WFE, thanked our stakeholders for convening and said, “We have 72 different jurisdictions represented here and we look forward to fruitful conversations when we discuss the issues that matter to all of us. The warmest of thanks to Bursa Malaysia, this is a moment to celebrate the dynamism of the ASEAN economy and the role that Bursa Malaysia and the exchange community here play in driving capital market development which in turn is a driver of social and economic development.”

In the opening Special Address, the audience heard a speech from the Prime Minister of Malaysia, YAB Dato' Seri Anwar bin Ibrahim, who said, “We welcome each of you as a friend. Malaysia is currently undergoing a profoundly transformative economic and social resurgence, and the world has taken notice of the advantages of investing here. Malaysia’s equity market capitalisation has now surpassed RM2 trillion, equivalent to over 450 billion US dollars. In the constant evolution and pursuit of a dynamic capital market, it is essential to recognise that capital market leaders play a crucial role in shaping the direction of business and society. Operating today’s exchanges brings forth seemingly conflicting challenges: balancing between returns for investors, promoting social good, and navigating disruptive trends. This three-day WFE event brings together brilliant minds and esteemed leaders from around the globe, all united by a passion to create successful capital markets.”

In fireside with Datuk Muhamad Umar Swift, CEO of Bursa Malaysia, YB Senator Datuk Seri Amir Hamzah Azizan, Finance Minister II, said, “What’s important for the public market is to facilitate the provision of capital to businesses that want to grow, to open for different segments of the market, and lead the acceleration of growth for Malaysia. We need to ensure that the market has the liquidity and attracts enough capacity so that it can fund capital raising when it needs to, and we must ensure that businesses are able to mature into the main market. This creates a much more vibrant market in the long term.”

Following a presentation by Dr Reena Aggarwal, Robert E. McDonough Professor of Finance at Georgetown University on the variations we see between exchanges in terms of ownership, governance, business models, and how they are responding to opportunities, Nandini Sukumar, CEO of The WFE, Jos Dijsselhof, CEO of SIX Group, Carlson Tong, Chairman of Hong Kong Exchanges & Clearing, and Kendal Vroman, Chief Transformation Officer at CME Group, discussed what makes for a good market infrastructure provider and how that has changed thus far, and how those attributes might change in future. Jos Dijsselhof said, "Certain elements of private markets attract businesses to stay private, such as the costs, time, and regulations associated with listing. We need to engage with issuers and stakeholders to make public markets more appealing and highlight their benefits. Exchanges can also support private markets to make them safer, fairer and more equitable, but we must balance both."

Abena Amoah, Managing Director and CEO of the Ghana Stock Exchange, chaired a panel looking at competition between exchanges, and the competition exchanges face from other sources of finance. She was joined by Jorge Alegria, CEO of Bolsa Mexicana de Valores, Khalid Abdullah Alhussan, CEO of Saudi Tadawul Group, and Richard Carleton, CEO of the Canadian Securities Exchange. In response to a question on how they work with their regulator on their growth market, Nomu, Khalid Abdullah Alhussan said, “Nomu is geared towards SMEs - those that are concerned by a rush of regulatory burdens being thrust upon them when they list. We have worked with our regulator to find ways to encourage listings on this platform and ways to protect the investors. We do this by using a series of criteria to check if the investor is qualified to appropriately analyse the investment options available on the market, and we also look at things like the size of their portfolio and the institution itself. This comforts the regulator, and over time the regulator is relaxing these criteria. It was tough at the beginning, we had just 10 listings, and now we have 100 companies listed on this platform. To grow their listings pipelines exchanges need to always be innovative in this regard.”

In answer to a question on whether cryptocurrencies are a threat to traditional finance, Iosif Itkin, CEO and Co-founder of Exactpro, said, “that is oversimplified for two main reasons, firstly because no one wants to replace traditional finance, everyone wants to be a part of traditional finance, even the worst actors out there. Therefore, everyone will try to integrate their systems with what is currently available. The second reason is related to scalability. When a system is important, it usually runs at the edge of its capacity, as it needs to be competitive and efficient. Any system not working near the edge of its capacity is probably not that important. The volume of excessive hardware that is used in most decentralized finance applications to run a relatively small number of transactions indicates that DeFi is not yet important for humanity.” The panel was chaired by Sunil Benimadhu, CEO of the Stock Exchange of Mauritius, and in addition to Mr Itkin, he was joined by Joseph Portelli, Executive Chairman of Malta Stock Exchange and Dr Matthias Voelkel, CEO of Boerse Stuttgart Group, and looked at why disintermediation in financial services has not lived up to its hype and how traditional financial services can adapt lessons from crypto markets without compromising on safety and regulation.

Key highlights from Day 3 include:

The Chief Executive Officers from Singapore Exchange, Bursa Malaysia, The Philippine Stock Exchange, The Stock Exchange of Thailand, Indonesia Stock Exchange and Vietnam Exchange, signed a Memorandum of Understanding to promote regional market connectivity, by pursuing the collaboration to offer Depository Receipts (DRs) in their respective exchanges. This will expand access for domestic investors to investment opportunities in neighbouring countries.

Following the signing they joined us for a panel on how the region can grow through collaboration. Loh Boon Chye, WFE Chairman and CEO at SGX Group, said: “Market infrastructures play an important role in strengthening financial markets and as a global industry association, we always look forward to our annual meetings where we can exchange best practices and foster resilient and innovative marketplaces. We are pleased that the ASEAN Exchanges – with a combined market capitalisation of US$3 trillion – have committed to collaborate via depository receipts, which would further develop our collective securities markets and expand access for domestic and international investors. As a growth region, ASEAN is a fast-emerging investment thematic for global investors, who stand to benefit from greater market connectivity and product accessibility.”

Carmine Di Noia, Director for Financial and Enterprise Affairs at the Organisation for Economic Co-operation and Development (OECD) delivered a presentation on developments in corporate bond markets from a structural perspective, following the OECD’s Global Debt Report, published earlier this year. Highlighting two turning points: the sudden stop in borrowing in 2022 following the inflation shock, and the subsequent rapid reversal of that trend, Mr. Di Noia concluded that, “the growth of bond markets as an outcome of the post 2008 regulatory changes that sought to reduce credit concentration in the banking sector, has been a really positive thing. Diversifying credit origination is critical, so that makes the monitoring of both these markets all the more important. We need to maintain their functioning so that they can continue to provide companies with access to funding and resilience to economies more broadly, and continue to be an increasingly strong asset class for long term investors, and for pricing risk.”

We held a panel looking at the global IPO market, exploring the decline in IPOs globally, and why a rising share of IPOs comes from emerging markets. The panel also discussed the relationship between listings and the private equity market, the role of the cross-border IPO, the importance of derivatives as a complement to listed equity and whether the system rewards patient capital sufficiently. Astrid Ludin, Deputy Commissioner of the Financial Sector Conduct Authority of South Africa chaired the panel consisting of Ed Knight, Executive Vice Chairman of Nasdaq, Datuk Muhamad Umar Swift, CEO of Bursa Malaysia, and Heba El Serafi, Vice Chairman of The Egyptian Exchange.

Ed Knight commented, “an IPO is a very unique event in our global financial system, and a very public event as a moment in time when the world opines on the future of a business’s dreams and ideas. We continue to see more optimism around IPO levels, with 159 IPOs on Nasdaq this year, up from 125 in 2023.* Next year, with the uncertainty around the election resolved and interest rates normalising, we expect more positive conditions for an even more healthy global IPO market. But it is a combination of factors: the market, the legal system, the level of transparency you offer investors, the level of confidence investors have in the regulatory system and the exchange’s technology system, and it is reflective of the culture and the economic conditions that are prevalent where the market is located. We’re cautiously optimistic about the future, and we want to see exchanges around the world succeed in their IPO programmes, that’s in everyone’s interest, and it’s important to economic growth globally.”
* 159 IPOs in 2024 as of 11/26/2024. 125 IPOs in 2023 as of 12/11/2023.

Dr. Jane Goodall of the Jane Goodall Institute and Tan Sri Abdul Wahid Omar, Chairman of Bursa Malaysia and WWF-Malaysia, had a fireside chat in which they discussed the connection between financial markets and the environment and how exchanges can inspire practical action in protecting our shared environment. Tan Sri Abdul Wahid Omar said, “When it comes to this audience, the World Federation of Exchanges, we are already sold on the need to conserve the environment, to reduce emissions and commit to net zero, not just for our respective entities, but the whole ecosystem. This is why many jurisdictions have come up with sustainability reporting frameworks for the constituents of our markets. Dr. Goodall implored those in leadership positions, whether in government or business, to think of their children when making decisions that impact the future. She further urged leaders to make thoughtful and strategic choices that not only reduce environmental footprint but also contribute to a more sustainable development, alongside preservation of the world’s biodiversity for the next generation. It was a profound honour to share the stage with Dr. Goodall. Her passion and well-articulated perspectives were inspiring, emphasising practical environmental and social action. The standing ovation accorded by the delegates to Dr. Goodall was truly heartwarming,” he added. 

Highlighting the importance of biodiversity, Dr Jane Goodall stressed the need to “understand that we humans are not the only sentient sapien beings on the planet, we now know that animals are far more intelligent than people used to think. It’s really important for corporations to think of the harm we do to these sentient sapien beings whose homes we are destroying in the pursuit of profits.”

Following the introduction of T+1 in some markets, and with other markets looking to follow suit, Mark Peterson, CEO of NZX Limited, chaired a panel looking at why jurisdictions move, or are waiting before moving to T+1. Panellists, John McKenzie, CEO of TMX Group, & Chair of the WFE Working Committee, Tarik Senhaji CEO of Bourse de Casablanca, and Rajeeva Bandaranaike, CEO of Colombo Stock Exchange, discussed what underlying factors are needed for a market to move successfully to T+1, the fundamental benefits to moving to T+1 and what issues or challenges should be expected, and their expectations for how likely it is that we will have widespread adoption of T+1 in markets around the world in the next five years. Canada's markets transitioned to T+1 in May of this year, and TMX applied valuable insights from the recent past. According to Mr. McKenzie, "the 2017 transition from T+3 to T+2 was an experience we could draw from in undertaking the process to move to T+1. Rather than a strong industry cost-benefit, as was the case with the move to T+2, the shift to T+1 was more of a regulatory driven decision, based on the timeline set by the SEC. As industry and regulators looked at risks in the marketplace, some concerns were raised around some trading communities extending too much credit to clients, creating a collateral and margin problem. Moving to T+1 offered the promise of collateral savings. I can say that since going live, the collateral savings are real. We’ve seen from 27-37% in absolute collateral savings, which is meaningful. Whether or not that compares to the cost, and opportunity cost, of essentially a year’s worth of work for the brokers, custodians, and the clearing houses to make that happen? Time will tell.”

Our final panel of the day looked at the rise in international political tensions globally and, with financial sanctions are becoming more common, the panellists discussed what regulatory measures exchanges can implement to cushion the impact of these sanctions. Chaired by Alina Aldambergen, Chairman of the Management Board of Kazakhstan Stock Exchange JSC, the panel comprised David Ngai, Alternate Chief Executive of Hong Kong State Street Bank and Trust Company, Mazen Wathaifi, CEO of Amman Stock Exchange and Dr Leila Fourie, Group CEO of Johannesburg Stock Exchange. Panellists also explored what strategies can be implemented to ensure financial stability and inclusion in politically polarized environments. As part of the conversation about what the key concerns of investors are in the new world in which we are living, David Ngai said, “from an international perspective, the two major topics on the minds of investors are, firstly, will there be an increased number of sanctions coming in and new regulations to ensure all practitioners comply with them?” To which he stressed the importance of communication to demonstrate that you have done your utmost to comply with what the respective regulators have asked of you, in particular, the homeland regulator, which in turn gives confidence to investors. Secondly, Mr. Ngai highlighted “operational resilience, i.e. cyber security, and how can investors ensure that the intermediaries – from exchanges, the custodians, or other market participants, are well equipped enough to address all these potential operational challenges.”

Following the conclusion of the final panel, we announced the host of the 64^th WFE General Assembly and Annual Meeting in 2025: Borsa Istanbul. Korkmaz Ergun, CEO of Borsa Istanbul, said, “Separated by the Bosphorus, Istanbul is a bridge between Europe and Asia. This unique geographical position provides the city with a rich combination of cultures and traditions. The WFE Annual Meeting is a vital platform for discussing critical issues of our industry, and acts as a bridge in the sector connecting all actors. These discussions will lay the basis for the advancement of our sector globally and regionally. We at Borsa Istanbul are especially excited to host in 2025, thank you in advance for your travels, making your way to Istanbul as our guests.”

Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia, commented, “Bursa Malaysia was proud to host this year’s WFE General Assembly and Annual Meeting, marking only the second time Malaysia has had the privilege of convening this prestigious global event since joining the WFE in 1981. This year’s gathering was timely, considering the complex and daunting challenges faced by industry players, and capital market leaders in balancing multiple goals - from fostering growth to ensuring sustainability. With Malaysia assuming the chairmanship of the Association of South-East Asian Nations (ASEAN) next year, it was an opportune time for Bursa Malaysia to take centre stage at the conference. We shared our success stories in building a healthy IPO pipeline, provided thought leadership in demonstrating collaborations, and explored the role of exchanges in supporting the development of the Southeast Asia region. We were heartened that as the host, Bursa Malaysia provided a platform for exchanging ideas. Through thought-provoking discussions and collaborative dialogue, we reaffirmed our shared commitment to cultivating a relevant, transparent, and sustainable global capital market. The spirit of innovation and cooperation displayed here will drive meaningful progress in the years ahead.”

For more information, please contact:

Cally Billimore

Manager, Communications

Email: [email protected]
Phone: +44 7391 204 007

About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents the providers of over 250 pieces of market infrastructure, including standalone CCPs that are not part of exchange groups. Of our members, 36% are in Asia Pacific, 43% in EMEA and 21% in the Americas. The WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some $1.3 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. The exchanges covered by WFE data are home to over 55,000 listed companies, and the market capitalization of these entities is over $111tr; around $124tr in trading annually passes through WFE members (at end-2023).

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.

Website: www.world-exchanges.org

Twitter: @TheWFE

---