Transcript Standard PowerPoint Presentation

© Copyright 2011, The NASDAQ OMX Group, Inc. All rights reserved.
TRANSPARENCY BY PAGANO
COMMENTS FROM
JENS HENRIKSSON, PRESIDENT NASDAQ OMX STOCKHOLM
TRANSPARENCY
WHAT AN EXCHANGE IS
REALLY ABOUT!
The exchange is the place where
demand and supply of capital meet
in an efficient and stable way.
Pre- and post-trade transparency
Issuer non-disclosure
Opaque trading
Issuer transparency
Support growth of companies and
the economy, create jobs.
We love transparency!
2
And so does the leaders of the
world!!
© Copyright 2011, The NASDAQ OMX Group, Inc. All rights reserved.
3
WHEN SHOULD WE NOT
HAVE FULL
TRANSPARENCY?
Transparency is the starting point
- Market integrity
Some transactions need to be less transparent
- Waivers from pre-trade transparency
- Delayed post-trade publication
Large transactions
- Equity.
- Non-equity  Swedish bond market
BUT! Exemptions need to be clear and harmonised
4
WHEN SHOULD WE
QUESTION ASSET
TRANSPARENCY ?
Focus both on INVESTOR and COMPANY perspective. Not always the
same…
Issuers are diverse
- Size, complexity, maturity, business model, company groups
- Main market + First North (equities, and bonds?)
Transparency may be better than detailed legislation
 Corporate Governance in principles-based codes + comply or explain
5
COMMENTS ON
TRANSPARENCY
Similar to Kay review – but it focused on effeciency; from a trading
perspective and a governance perspective.
”A large literature shows that higher liquidity is associated with … a lower
cost of capital to firms”
”Why are markets so opaque?... in many cases [intermediaries] own the
platforms… Opaque platforms are more resilient to competition.”
6
Gomber and Pieron ”However, our analysis of individual OTC trade size
data between January 2008 and April 2010 both for high liquids (EURO
STOXX 50 constituents) and a sample of less liquid securities shows that
a significant share of OTC transactions are neither above SMS nor would
they face market impact if concluded on open, public order books.”
COMMENTS ON
TRANSPARENCY
”the faster information gets impounded in market prices: better price
discovery.”
”Market platforms… are not interested in making information about the
trading process available quickly and for free.”
We are interested! But no incomes, no speed, and in the long run: no
markets.
Three reasons” for opacity: Compliance. Tax. Information processing.
More reasons: Fraud. Business secrets. Public anger….
”Information processing costs.”
Has anybody read a whole prospect? The fine print?
7
ALL IN ALL. A VERY GOOD
PAPER!
8