World Federation Of Exchanges Open Letter To Global Financial Policy-makers

Milan / Chicago / Paris - 23 October, 2008 - Meeting at their annual General Assembly last week, the leaders of the 55 members of the World Federation of Exchanges addressed themselves to global financial policy makers in this open letter.  Its purpose is to explain the ongoing contributions of exchanges to the world's financial system, and our role in helping to resolve its current problems.

 

 

TO:

International Organization of Securities Commissions

Financial Stability Forum

Organization for Economic Co-operation and Development

Bank for International Settlements

International Monetary Fund

 

 

Public, regulated exchanges remain critical providers of liquidity to the world's capital markets, along with central banks, and now governments through their direct interventions.  Our work provides ongoing, transparent price discovery for much of the world economy's financial assets, together with financial futures and futures on physical goods. 

 

The combination of exchange-listed and traded securities, options and futures has led to considerable innovation and efficiency.  The financial crisis did not begin in the exchange environment.

 

Together, the leaders of this industry are committed to maintaining regular trading hours so far as possible.  Any recent interruptions have been principally for two reasons only.  First, since 1987, a system of circuit-breakers brings momentary halts in conditions of extreme volatility, allowing all participants to pause and reflect on how to proceed.  The second relates to collateral deposited with clearing or settlement houses.

 

The combination of exchanges' post-trade arrangements, including the use of clearing central counterparties to guarantee trade execution, allows for certainty of transactions.  It is a distinctive quality of the regulated exchange environment, reducing the need for scarce capital for investors and market participants, and enabling exchange-operated markets to remain open when so many other capital market segments closed.  The possibility for investors to sell short contributes to liquidity; we would ask that this practice be allowed to be resumed.

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We also remain committed to the 50,000 or so companies whose securities are listed on WFE member exchanges.  We intend to do what we can to continue to provide them with access to capital for growth.  This may now be even more crucial for the financing of small and medium-sized enterprises.

 

We maintain our involvement with enhancing the value and clarity of financial reporting, and we are fully prepared to contribute to assuring that rating agencies serve investors.

 

As business plans are being adjusted, we are already scrutinizing the extent to which certain OTC instruments might lend themselves to trading and settlement in the regulated exchange environment.

 

The exchange industry shares concerns about an economic slowdown, and agrees that the defence of the economy is now a project of global scale.  Exchange leaders are mindful of their share of these responsibilities.  Exchanges are part of the solution. 

 

We are ready to work with global policy makers in order to understand where else we may make positive contributions.

 

 

Sincerely yours,

 

 

Massimo Capuano

Chairman of the World Federation of Exchanges

Deputy Chief Executive Officer of the London Stock Exchange Group

 

 

William J. Brodsky

Vice Chairman of the World Federation of Exchanges

Chairman and Chief Executive Officer of the Chicago Board Options Exchange

 

 

Thomas Krantz

Secretary General of the World Federation of Exchanges

 

 

 

 

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The WFE member exchanges are:

Amman Stock Exchange

Athens Exchange

Australian Securities Exchange

Bermuda Stock Exchange

BME Spanish Exchanges

BM&F BOVESPA

Bolsa de Comercio de Buenos Aires

Bolsa de Comercio de Santiago

Bolsa de Valores de Colombia

Bolsa de Valores de Lima

Bolsa Mexicana de Valores

Bombay Stock Exchange

Borsa Italiana

Bourse de Luxembourg

Bourse de Montréal

Budapest Stock Exchange

Bursa Malaysia

Chicago Board Options Exchange

CME Group - Chicago Mercantile Exchange

Colombo Stock Exchange

Cyprus Stock Exchange

Deutsche Boerse

The Egyptian Exchange

Hong Kong Exchanges and Clearing

Indonesia Stock Exchange

IntercontinentalExchange ICE

International Securities Exchange - ISE

Irish Stock Exchange

Istanbul Stock Exchange

Jasdaq Securities Exchange

Johannesburg Stock Exchange

Korea Exchange

Ljubljana Stock Exchange

London Stock Exchange

Malta Stock Exchange

NASDAQ OMX

National Stock Exchange of India

New Zealand Exchange

NYSE Euronext

Osaka Securities Exchange

Oslo Boers

Philippine Stock Exchange

Shanghai Stock Exchange

Shenzhen Stock Exchange

Singapore Exchange

Stock Exchange of Mauritius

Stock Exchange of Tehran

Stock Exchange of Thailand

SIX Swiss Exchange

Taiwan Stock Exchange

Tel Aviv Stock Exchange

Tokyo Stock Exchange

TMX - Toronto Stock Exchange Group

Warsaw Stock Exchange

Wiener Boerse