Download OCA - Federation of European Securities Exchanges

A view from the top
Judith Hardt
Secretary General
Federation of European Securities Exchanges
17th Annual Zagreb Stock Exchange Conference
12th October 2007
FESE members
24 Full
Members/30
countries
4 Corresponding
Members/4
countries
(Zagreb SE,
Montenegro SE,
Macedonian SE,
Belgrade SE
Corresponding
Members:
Banja Luka SE,
NEX, Sarajevo
(end 2007)
Introduction to FESE
•
•
•
Whom do we represent?
– FESE represents 38 Securities Exchanges from all EU Member
States (+ Iceland, Norway and Switzerland) as well as 4
Corresponding Members. We also represent derivative and
commodity exchanges.
What are our goals?
– To present exchanges and their contribution to the European and
global economy;
– To foster the global competitiveness of European exchanges;
– To promote understanding of capital markets and find innovative
solutions.
How are we achieving our goals?
– We provide up-to-date information on our markets.
– We provide a forum for open and forward-looking debate on
capital markets;
– We engage in an active dialogue with EU legislators and
regulators (EU Commission and the EU Parliament) and EU
supervisors (CESR).
– We participate in relevant discussions on an international level.
Examples of latest campaigns
MiFID
• Enhancing best execution obligations for investors
• Persuading CESR to allow an alternative method for the
identification of instruments in the context of MiFID
transaction reporting requirements
• Interacting with CESR on the list of ‘liquid shares’
Commission pressure to deliver on Post-trade services
• Negotiating mutual recognition of post-trade access and
interoperability rights through the adoption of a Code of
Conduct on Clearing and Settlement and the signature of
European Access and Interoperability Guideline
Global mergers and impact on EU markets and regulation
• Policy statement sent to SEC Chair, Cox, on possible mutual
recognition
• Preparation of EU constituency and lobbying network to
influence SEC Mutual Recognition proposals
A view from the top:
European market trends
2006 record levels both in number and
value of trades across all asset classes
2006
One year increase
480,308,374
16,733,556
11,394,938
+34.4%
+31.2%
+18.9%
34,083,800
367,771
+40.3%
+62.6%
ETFs
Trades
Turnover (EUR mill.)
1,770,801
156,787
+88.6%
+61.1%
Bonds
Turnover (EUR mill.)
9,750,578
+7.2%
Derivatives - equity
Notional turnover (EUR mill.)
Contracts traded
34,661,664
1,312,501,754
+60.9%
+14.8%
Derivatives - bonds
Notional turnover (EUR mill.)
Contracts traded
440,579,288
1,156,919,189
+16.7%
+13.9%
Equity
Trades
Turnover (EUR mill.)
Market Capitalisation (EUR mill.)
Securitised derivatives
Trades
Turnover (EUR mill.)
Source: FESE
Record levels in 2006 in:
• Number of Trades
• Value of Trades
For:
• Equity, Bonds and
Derivatives
Equity trading key figures for the last 3 years
show huge increase in number of trades
400%
Over the last three years:
• Number of trades has increased by more than 300%
• Market Capitalisation increased by 149%
• Trading value (turnover) increased by 119%
304%
300%
293%
Trades
227%
200%
149%
125%
100%
100%
119%
118%
156%
Mkt. Cap.
112%
Turnover
0%
2004
Source: FESE
2005
Market Capitalisation (EUR mill.)
2006
Total Turnover (EUR mill.)
2007* (Until August)
Number of Trades
Number of listed companies steadily increases
12,000
160,000
154,098 EUR mill.
140,000
10,000
132,420 EUR mill.
112,733 EUR mill.
120,000
80,000
60,000
40,000
2,000
20,000
0
0
2004
2005
Number of Companies with Listed Shares
2006
Number of NEW Listed Companies
Source: FESE
Note: Following FESE Statistics Methodology only those shares admitted to listing on a stock
market at the end of the period are included.
2007* (Until August)
Investment Flows (EUR mill.)
EUR Million
100,000
8,639 Companies
4,000
871
8,384 Companies
6,000
596
941
8,169 Companies
664
8,000
8,058 Companies
Number of companies
115,532 EUR mill.
Revenue structure of FESE member
Exchanges 2005 – 2006*
30%
28%
26%
25%
20%20%
20%
15%
12%
11%
11%11%
10%
10%
8%
8%
7%
8%
7%
5%
5%
5%
2% 2%
0%
Listing
(admission
+ ongoing)
Cash
Trading
Derivatives
Trading
Clearing /
CCP
*Excluding ICE and Bulgarian SE
Note: Some members include several revenue sources into one.
Settlement
2005
2006
Custody &
Banking
Info
products &
services
ICT
services
Other
(advert.,
educat.,
properties)
Global market trends: impact on
European exchanges and
regulation
- European consolidation
- Global consolidation
- Impact on supervisory structures
in Europe
- Supervisory convergence
Continued consolidation of the European
exchange landscape
Clearing &
Settlement
MoTit & CC&G
LCH.
ClearNet
Euroclear
Eurex
Clearstream
(DEU & LUX)
SIS-Group
Iberclear
NCSD
(SECUR &
EXIGO CSD)
Source: FESE
Cash Markets
Derivatives
IDEM
LON-BIT
EDX London
WAR
LUX
NYSE Euronext
NY, PAR, AMS, BRU, LIS
Euronext LIFFE
ATH
CYP
Eurex, (HEX)
DEU
SWX
VIRT-X
WIE
BUD
IRL
BRA
PRA
MAL
XETRA
LME, ICE,
NYMEX & ECX
BME
MEFF
OMX
OMX DM
& OSL
HEX STO
COP TAL
RIG VIL
ICE
NOREX
OSL
LJU
BUC MOL
BLU BEL
RUS SOF
MAC MON
TIR UKR
SAR ZAG
Globex
ENXT MEFF MIF
CME MONTR
BM&F SGX
And the emergence of a global exchange
landscape (End 2007)
Europe
America
Asia
LON-BIT
LUX
NYSE
ISE
WAR
Euronext
PAR, AMS, BRU, LIS
ATH
CYP
DEU
SWX
VIRT-X
WIE
BUD
IRL
BRA
PRA
MAL
NASDAQ –
Borse Dubai
Source: FESE
Source: FESE
HEX STO
COP TAL
RIG VIL
ICE
5% Bombay SE
5%
XETRA
Singapore SE
4.99%
Tokio SE
BME
OMX
5% National Stock
Exchange
NOREX
OSL
LJU
BUC MOL
BLU BEL
RUS SOF
MAC MON
TIR UKR
SAR ZAG
What should be the regulatory response to
globalisation? Do we need a “world regulator”?
The case-by case-approach
• Historically, derivative exchanges have benefited
from the CFTC’s no-action letter regime
• No retail investor protection concerns
A new multilateral approach?
• The SEC’s expected concept paper will focus on
mutual recognition of rules (not standardisation).
• Will the EU be recognised as a single securities
jurisdiction?
• Will there be any regulatory spill-overs (such as
class actions, extraterritorial enforcement or prior
regulatory alignment) that could impact Europe’s
competitiveness?
FESE’s position on cross-border business
across the Atlantic
• The time for mutual recognition has come.
• The EU regulatory and supervisory framework is
robust and state-of-the art.
• The EU and US markets can agree on mutual
recognition without any significant regulatory
alignments.
• Trading screens can be the first area of focus.
• No jurisdictions to be disadvantaged or left behind.
• EU-US political framework to be complemented
with objective technical assessments.
• No limitations on scope are best – but if any
needed, then professional clients and nondomestic securities are a good starting place.
• Mutual recognition – but no extraterritoriality!
Lessons to be learned
• Globalisation comes before final integration of
European securities markets: will this have an
impact on supervisory structures in Europe?
• What should be the role of CESR and national
regulators?
• How can we support regulatory and supervisory
convergence with a decentralised network?
• Our problem: supervision of multi-jurisdictional
exchanges
• The current discussions on global accounting
standards and the role of IASB as global
accounting standard setter point to the need to
encompass Europe’s regional dimension and to
adopt transparent rules.
Opportunities for European
Regulated Markets
The value proposition of European
Regulated markets
• Most attractive execution venues:
– Neutrality: independence from interests
of specific members.
– Technology: first to change to automated
trading in early 1990s!
– Transparency: benchmark for the market
– Competition: already existing interexchanges, OTC.
In addition, Regulated markets will pursue
the following competitive strategies…
Strategy 1 – Increase European and
International consolidation and coordination
• Global and European M&As:
– NASDAQ-Borse Dubai-OMX
– LSE-Borsa Italiana
– NYSE-Euronext
• Partnerships in Europe and in emerging markets,
especially in Asia and Latin America.
– OMX technology: Canada, Bucharest, Zagreb…
– DB technology: Irish SE and Vienna SE; Stake in Bombay
SE.
– DB – SWX: Eurex Derivatives exchange
– BME – DB: Infobolsa
– BME technology: Venezuela, Ecuador, Mexico…
– Vienna SE – Bucharest, Zagreb, Belgrade, Sofia, Sarajevo,
Montenegro, Banja Luka and Macedonia.
Strategy 2 – Facing up to MiFID - New
Services
• More competition…
• …And more Opportunities!
–
–
–
–
–
Increase services to both the buy and sell sides.
MTFs for different clients or market segments
Increased volumes in cross-border trading
Lower direct and indirect costs
Increased focus on service and quality of
execution
– Development of information services
– SMEs markets – Especially important for Central
& Eastern Europe!
Strategy 2 - Code of Conduct for Clearing and
Settlement – Creating a true European market
Price
transparency
Access &
Interoperability
Core goals of
the Code:
Service
Unbundling
efficient, competitive,
integrated, and
safe market for
C&S
Account
Separation
Strategy 2 - New services – Code of
Conduct for Clearing and Settlement
Scope limited to cash equities and issuer CSD services
Scope
Price
transparency
Access and
interoperability
Extension of self-regulatory approach on other asset-classes to be reviewed in 2008
Public disclosure of prices and discount/rebate schemes to facilitate comparison
to be in place by December 31, 2006
Guidelines on enabling the establishment of links between providers of trading and posttrading services to be in place by June 30, 2007 to provide more choice to market
participants
Service unbundling will improve flexibility for market participants in selection of service
elements between value chain layers and within settlement/custody through service
and price unbundling
Service, price,
and accounting
unbundling
Reporting of separated accounts for value chain layers and CSD services to the national
regulator (both to be in place by December 31, 2007) to enhance transparency
Monitoring
Monitoring by external auditors and ad-hoc-committee (MOG) to ensure compliance of
undersigning parties with the Code
Strategy 2 - New services – Code of Conduct
for Clearing and Settlement
Code of conduct implementation timeline
31/12/2006
Price
Transparency

30/06/2007
Access &
Interoperability

01/01/2008
Unbundling &
Accounting
Separation
in progress
Code
fully
implemented
Any questions?
& Thank you for your attention!...