Posts filed under 'Stock exchanges'
Our society is in transition. It is applying new technologies to create new structures. Proprietary information is no longer necessary to encourage innovation or distribution channels. The internet provides a virtually free distribution channel in a services based economy. Online social networks have redefined how we interact with large numbers of people adopting new behaviours. Online industry network will redefine industry. Online political networks will redefine politics.
The following is intended to provide a summary of how our society operating in a Web 1.0 world and the emerging Web 3.0 world. This is one of a series of concepts that explain the evolution toward Web 3.0. I recommend you review the visual overview of these concepts in the Marcus.cake overview presentation.
Continue Reading August 19th, 2008
Recent market turmoil is likely to eliminate the growth on stock exchange trading volumes. This growth had driven the growing revenue of stock exchanges in the last five years. Cost cutting has also contributed significantly to profitability. With growth unlikely and further opportunities for cost reduction minimal, stock exchanges will now seriously consider other strategic initiatives. Collaborative hubs are likely to be at the top of the list.
Continue Reading April 1st, 2008
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At its simplest, the business of stock exchanges is the matching of buyers and sellers of quantities of shares. At its more complex are important functions of settlement and custody. The industry could, however, run on a single computer anywhere in the world and offers a very narrow niche of functionality for the equity market. Most of the stock exchange infrastructure in the world is obsolete. It could also be suggested that much of the software that runs enterprises is also obsolete. If the software is not obsolete, it could be replaced or rebuilt at a fraction of the cost. Stock exchange consolidation may just combine redundant technology, declining customers bases and a redundant business model. This legacy may prevent new initiatives to provide greater access to the equity market for smaller companies. We may have a larger organisation with the same redundant business model with limited access to a niche of potential market participants. Will this new organisation provide greater access to capital markets for all market participants?
Continue Reading September 29th, 2007
Grant Thornton conducts an annual review of global growth markets. The report confirms a number of key trends. Capital markets are becoming more global and less regional, financial centres and specialising and certain stock exchanges are growing strongly. The most popular growth exhanges are in UK (AIM), Singapore, Hong Kong and Canada. Companies are becoming increasingly comfortable listing on foreign exchanges. This is contributing the the rise of specialist financial centres and global growth stock exchanges. The internet provides investors with transparency and direct access to information. Many stock exchanges and their closed information networks will struggle to find a niche in a globally connected world and free flow of information. Globally distributed online networks are likely to support growth companies and growth exchanges. Online networks will deliver the international companies, advisers and investors necessary to deliver liquidity to small exchanges that have been historically restricted to local business.
Continue Reading August 31st, 2007
Regional stock exchanges are deprecated. They will be superseded by new structures in a global market. These new features include online industry networks, global and specialist stock exchanges and a global private equity industry that can provide capital for any size of transaction - small and large in any market. Companies will need time to change their approach and use these new features of the global equity market. Regional stock exchanges are likely to throw up a lot of deprecation errors, or public relations messages, as they struggle with emerging global exchanges and online industry networks. The pace of industry consolidation has rapidly increased in the last 18 months as the global stock exchange is created. With economies of scale, a global stock exchange may be able to provide access to the equity market for companies which previously could not get access. It is unclear whether the global exchanges currently being created will improve access to the equity market by smaller companies.
Continue Reading June 4th, 2007
The process of stock exchange consolidation continues. Nasdaq agrees to acquire Sweden’s OMX for US$3.7b.
Continue Reading May 25th, 2007
Online networks which embody every facet of industrial, social and politcal aspects of our modern society are inevitable. They simply offer a superior way to interact and transact. The transition to a global community based around online networks will take six months, sixteen years or fifty years. The timeframe will depend upon the outcome of three epic battles. The battles are economic development vs geostrategy, community knowledge vs intellectual property, and online networks vs closed systems. Online industrial, political and social networks which are involved in these battles could be delayed for decades.
Continue Reading May 22nd, 2007
Information technologies which capture, store, process or transmit information double in performance or halve in cost every 18 months. Moore’s law has been working patiently for 40 years. In an information economy, this should have had a dramatic effect. However, political, industrial and social structures largely remain the same. Advances in technology have not changed the fundamentally way that our society or economy has operated. The right information in the right place at the right time will transform the world. This transformation will only start now. This article will discuss why such a process should only begin now and what role information is likely to have.
Continue Reading May 15th, 2007
The objectives of open source will change over time. As open source evolves and proves its capability, it will move beyond technology, beyond specific industries, to all other aspects of our society. This has been suggested in the past. However, existing organisations are not sufficiently motivated to apply advances in technology to promote development. Business, social and political entrepreneurs that establish online networks are likely to be the primary force for change.
This article outlines the first four stages of the development of online networks and the .Net boom. The objective of the online network in each stage is identified.
Continue Reading March 24th, 2007
Regulations have trailed the opportunities and benefits presented by technology. The SEC has only recently changed its regulation to allow the delivery of shareholder information by the internet. The internet presents the world with an opportunity for a truly global capital market. Regulation is critical to the integrity and credibility of equity markets. However, in an era of global business and the internet there are limits to the reach and effectiveness of regulation. My spam filter receives at least 10 emails a day recommending the purchase of the shares of a listed company. I suspect many receive similar emails. It is difficult to see how any method of regulation could protect an investor from Spam, or point to point communication. Can we protect the “investor” in a world where information can travel from individual to individual, companies can shift countries and advisers could use the internet to mask their identity. The challenge for global regulators is real. A careful balance must be struck between the need for efficient and effective capital markets, effective investor protection at a minimum of transaction costs. The efficient and effective operation of global capital markets is critical to capital formation, economic growth, taxes to fund government and having available resources to address the critical environmental, health and social problems of our time.
Economic development and new technologies can require significant adjustment for existing players. In financial markets, many of these business models were formed in the early 1900’s. Large organisations and signficant infrastructure was required to distribute information from point to point. In an era of the internet, the cost of distributing information point to point is almost zero. Information distribution business based upon old business models must adapt. Given the significant investments, many current players are unable to change. Only new entrants have the flexibility to offer new business models offered by the internet.
Continue Reading February 26th, 2007
The electronic distribution of shareholder information will reduce costs and provide immediate delivery of information to shareholders. Electronic delivery may bypass established channels for information delivery and may accelerate disintermediation. However, the change is likely to be a universally positive for market efficiency with more direct communication between a company, its shareholders and advisers. It may also be possible that reduced transaction costs could lead to improved access to capital markets by smaller companies.
Continue Reading January 31st, 2007
Hong Kong raised more capital in 2006 for the largest companies than any other market. In addition, it also offers small high growth companies a better opportunity for liqudity at significantly less cost than other markets. Hong Kong’s Growth Enterprise Market, a “Buyer’s Beware” market for informed investors, is specifically designed for these small growth companies. A company does not need to be incorporated in Hong Kong and “does not include any profit ‘track record’ requirement nor any obligation to forecast future profitability”. The listing fees are modest and comparable to many offshore stock exchanges. However, I suspect that the opportunity for liquidity may be greater in Hong Kong. I have previously highlighted the lack of liquidity in offshore exchanges, but perhaps the weight of capital in the world generally and Hong Kong specifically will boost liquidity in offshore exchanges. Ofcourse, any company that lists in Hong Kong would need Hong Kong or Chinese business to maximise appeal to local investors. I remain intrigued by the opportunity for online social networks to contribute to the stock exchanges and the equity market.
Continue Reading January 17th, 2007
Recent deals confirm that the process of industry consolidation is occurring at a global level. The major players have interest in markets beyond those of Europe and the United States. Some of my recent articles have provided an analysis of market share and described some of the activity in different markets.
Continue Reading January 14th, 2007
Striking a balance between consumer protection, compliance costs and maintaining an effective market to raise capital for companies is very difficult. The following two articles suggest that the balance is skewed heavily toward consumer protection to the detriment of companies. Companies are simply moving to new markets where capital is easier to raise and costs are lower. If the balance is not right, the migration of companies will result in lost jobs and lost tax revenue to other financial centres.
Continue Reading August 15th, 2006
The United States also driving companies away from their home market. Sarbanes-Oxley Act, increased regulation and complexity have increased the cost of raising capital and the risk of non-compliance. Offshore centres are attracting companies away from the United States. “23 of the 24 firms recently looking to raise more than a billion dollars in capital chose to list overseas rather than in the U.S.”
Continue Reading June 25th, 2006
“A true sea change is taking place in the capital markets industry worldwide. Driven by sociological, regulatory and technological developments, this wave will completely alter the face of the industry and the roles of current market participants over the next 10 years.”: Bearingpoint. Stock exchanges will move beyond order execution, to providing investment banking services and enhanced clearing and settlement. Smaller firms will follow Google’s IPO example and approach the public directly rather than through intermediaries.
Continue Reading June 20th, 2006
The BVI has incorporated over 700,000 companies, which by some estimates represents approximately 40% of companies registered in “offshore” jurisdictions. It has achieved its leading position by offering a specific mix of corporate law, investor protection, simplicity and privacy that others have since copied. The BVI has unique attributes that mean it is always considered as a place to incorporate. It has a cost-effective regime that has been recognised by the British government, the International Monetary Fund, the Organisation for Economic Cooperation and Development (OECD) as being compliant with the relevant international standards. Although, these same organisations also demonise offshore jurisdictions to discourage their use and protect domestic tax bases. Eleven BVI companies are listed on the the AIM stock exchange including an E-Gaming company.
Continue Reading June 14th, 2006
The internet would appear to facilitate greater participation in the “listed company” market by the offshore stock exchanges. Offshore centres can list companies at a fraction of the cost of onshore exchanges. Onshore equity markets are expensive and can only be used by large companies. Does the current standard of compliance and regulation mean that small companies can not get capital for growth so that they become large? What does society gain from ensuring effective capital allocation to early stage companies? In the internet era, the offshore stock exchange may ultimately have a greater role.
Continue Reading June 9th, 2006
Approximately, 33-40% of the worlds financial assets and 50% of financial market transactions occur in offshore jurisdictions. In recent years, onshore countries have collaborated to stamp out “harmful tax competition”. The offshore jurisdictions are, and will remain, a critical part of the financial system. The internet and standardisation of offshore “products” has made offshore accessible to all. The onshore economies may continue “enforce” existing laws which seek to tax residents on world wide income. They may engage in “tax competition” or restructure misunderstood and unworkable tax systems. Whatever happens, the internet is likely to play a significant role in facilitating change.
Continue Reading June 8th, 2006
For the year ending March 2006, the number of companies listed on the NYSE and NASDAQ fell 3.1% and 0.9% respectively. Could the decline in their home markets have inspired these major exchanges to acquire or merge? A combined NASDAQ / London Stock Exchange represents 15% of the number of global listed companies and 14.7% of global market capitalisation. A combined NYSE / Euronext represents 8.5% of the number of global listed companies and 25.7% of global market capitalisation.
Continue Reading May 22nd, 2006
During the period ending 31st March 2006, the market capitalisation of stock exchanges in the America’s, Asia Pacific and Europe grew 15.3%, 36.2% and 23.3% resepctively. This was driven by increasing valuations of listed companies, but was also influenced by changes in the number of companies. There were changes in the number of companies:- The America’s decreased 0.5%, Asia Pacific increased 2.5% and Europe increased 3.5%. Despite strong equity markets, there was a decline in the number of companies listed in key markets and specific exchanges that implemented niche strategies experienced growth.
Continue Reading May 18th, 2006
“Power will shift from the traders who have benefited from merely facilitating transactions to the buyers and sellers who take positions on either end of the trade, and that which is most highly prized in financial markets – the ability to create value – is likely to experience a renaissance as transformational as anything the industry has ever witnessed.” - IBM report. The opportunity for online social networks in financial markets is becoming clear.
Continue Reading April 17th, 2006
