The Future of the Financial Exchanges: Insights and Analysis from The Mondo Visione Exchange Forum (Elsevier World Capital Markets)

In May 2007, an extraordinary meeting took place in London's The Exchange Forum. Chief executives from many of the world's most important financial exchanges came together with senior executives from a wide array of global banking, trading, and investing firms, index providers, regulators, system suppliers, and key academics to discuss the rapidly changing business and technological environment in which exchanges function. The forum was an exclusive event, open only to the most senior-level individuals in the global exchanges community: those who run exchanges, who are clients of exchanges, who invest in exchanges, and who supply goods and services to exchanges.In presentations and panel discussions over two days, these experts explored the effect of shrinking margins as more instruments became exchange traded rather than OTC and the conflicts that creates. They shared what exchanges are doing today to respond to the challenges wrought by competition, globalization, and rapid technology advances. And they looked into the future and discussed the multi-asset, multi-currency, and multi-region trading that holds out the promise of future success.The book is based on the discussion and analysis that took place at this exclusive event that brought together leading exchange professionals, their customers, and suppliers from around the globe to share insights and experiences. It will provide an overview of the latest technological, regulatory, and market developments in the exchange industry and the common problems exchanges face; explain how these problems are being addressed; and present the consensus view from leading exchange professionals about how to move forward. Most significant, the ideas in the book will come directly from the worlds leading exchange professionals and customers. * Hear the voices of executive-level exchange professionals throughout the book for a candid, realistic, and high-level analysis of the exchange business, its present and future* Share the stories of success and failure these exchange executives shared as they discussed solutions to common challenges* Chart the way forward for your exchange business with confidence based on the collective insights and experience of these professionals Cover Page......Page 1 Copyright......Page 2 Preface......Page 3 Acknowledgments......Page 5 Introduction......Page 7 Background......Page 8 Competition......Page 10 Smart Order Management Systems......Page 11 Demutualization......Page 13 London Stock Exchange......Page 14 NYMEX......Page 17 Euronext......Page 19 DTCC......Page 20 Eurex......Page 22 Corporate Governance......Page 23 Governance and the Issue of Market Power......Page 26 Governance and Socially Responsible Investing......Page 28 Industry Initiatives and Voluntary Codes......Page 29 Transparency......Page 31 The Competitiveness Debate......Page 33 FINRA......Page 34 CESR......Page 36 Global Considerations......Page 39 Self-Regulation......Page 40 Introduction......Page 43 "Plumbing" Innovations......Page 44 Innovations on the Back End......Page 47 Innovations in Trade Execution......Page 49 Project Turquoise......Page 52 Controversy......Page 55 The Cycle of Competition......Page 57 The Rulebook......Page 59 Direct Market Access......Page 61 Banks and DMA......Page 62 Derivatives in the OTC Space......Page 63 Changing Client Base......Page 64 Portfolio Margining......Page 66 New Market Participation......Page 68 Exchanges with Multiple Products......Page 73 The Role of Hedge Funds in Growth......Page 78 The OCC......Page 79 Price and Quantity Discovery......Page 83 Transaction Cost Analysis......Page 85 More on Clearing and Settlement......Page 88 Cast of Characters......Page 89 Ensuring Competition in the "Plumbing" Business......Page 90 Encouraging Market Entry......Page 91 Cooperation or Competition?......Page 92 Balancing Needs......Page 94 The U.S. Infrastructure......Page 95 Scale and Scope......Page 98 TARGET2-Securities......Page 99 Code of Conduct......Page 101 Extending the Code of Conduct to Derivatives......Page 104 Introduction......Page 106 The End of a Monopolistic Trading Environment?......Page 107 Fragmentation......Page 108 CSAs......Page 109 Consolidation, Collaboration, and Competition......Page 110 Midsize European Exchanges......Page 111 Collaboration......Page 113 Transatlantic Market Integration......Page 115 Fees......Page 117 Method......Page 121 Vertical Silos......Page 124 Innovation and Product Development......Page 127 Johannesburg Stock Exchange......Page 128 A New World for Private Shareholders......Page 129 Educating Investors......Page 130 Latency......Page 131 About the Author......Page 136 Mondo Vision e Exchange Forum 2007 Speakers’ Biographies......Page 137 C......Page 149 F......Page 150 L......Page 151 P......Page 152 U......Page 153 Y......Page 154 In May 2007, an extraordinary meeting took place in London's The Exchange Forum. Chief executives from many of the world's most important financial exchanges came together with senior executives from a wide array of global banking, trading, and investing firms, index providers, regulators, system suppliers, and key academics to discuss the rapidly changing business and technological environment in which exchanges function. The forum was an exclusive event, open only to the most senior-level individuals in the global exchanges community: those who run exchanges, who are clients of exchanges, who invest in exchanges, and who supply goods and services to exchanges.

In presentations and panel discussions over two days, these experts explored the effect of shrinking margins as more instruments became exchange traded rather than OTC and the conflicts that creates. They shared what exchanges are doing today to respond to the challenges wrought by competition, globalization, and rapid technology advances. And they looked into the future and discussed the multi-asset, multi-currency, and multi-region trading that holds out the promise of future success.

The book is based on the discussion and analysis that took place at this exclusive event that brought together leading exchange professionals, their customers, and suppliers from around the globe to share insights and experiences. It will provide an overview of the latest technological, regulatory, and market developments in the exchange industry and the common problems exchanges face; explain how these problems are being addressed; and present the consensus view from leading exchange professionals about how to move forward. Most significant, the ideas in the book will come directly from the worlds leading exchange professionals and customers.

* Hear the voices of executive-level exchange professionals throughout the book for a candid, realistic, and high-level analysis of the exchange business, its present and future
* Share the stories of success and failure these exchange executives shared as they discussed solutions to common challenges
* Chart the way forward for your exchange business with confidence based on the collective insights and experience of these professionals In May 2007, an extraordinary meeting took place in London's The Exchange Forum. Chief executives from many of the world's most important financial exchanges came together with senior executives from a wide array of global banking, trading, and investing firms, index providers, regulators, system suppliers, and key academics to discuss the rapidly changing business and technological environment in which exchanges function. The forum was an exclusive event, open only to the most senior-level individuals in the global exchanges community: those who run exchanges, who are clients of exchanges, who invest in exchanges, and who supply goods and services to exchanges. In presentations and panel discussions over two days, these experts explored the effect of shrinking margins as more instruments became exchange traded rather than OTC and the conflicts that creates. They shared what exchanges are doing today to respond to the challenges wrought by competition, globalization, and rapid technology advances. And they looked into the future and discussed the multi-asset, multi-currency, and multi-region trading that holds out the promise of future success. The book is based on the discussion and analysis that took place at this exclusive event that brought together leading exchange professionals, their customers, and suppliers from around the globe to share insights and experiences. It will provide an overview of the latest technological, regulatory, and market developments in the exchange industry and the common problems exchanges face; explain how these problems are being addressed; and present the consensus view from leading exchange professionals about how to move forward. Most significant, the ideas in the book will come directly from the worlds leading exchange professionals and customers. \* Hear the voices of executive-level exchange professionals throughout the book for a candid, realistic, and high-level analysis of the exchange business, its present and future \* Share the stories of success and failure these exchange executives shared as they discussed solutions to common challenges \* Chart the way forward for your exchange business with confidence based on the collective insights and experience of these professionals