Establishing information exchange between securities markets


  • Exchanging information among securities markets
  • Linking securities trading processes internationally

Context

The creation and/or strengthening of regular channels of information exchange among securities markets implies either formal agreements on information flows or the establishment of forums for regular discussions. In the latter case, the dialogue may involve other actors, particularly supervisory agencies.

Implementation

These forums may work most efficiently when structured as regional federations/associations, following the examples of FIABV, BOLCEN, ASEA, the Union of Arab Stock Exchanges and the East Asian and Oceanian Stock Exchanges Federation which cover the developing world and the Federation of Stock Exchanges in the European Community which now covers the whole European Economic Area (EEA). These organizations have adopted target-oriented agendas.

The links among securities trading processes in different countries may take various forms. The most common version, applied also in such examples as trading between Argentina and Brazil and within CARICOM, is a correspondent relationship between the brokers in each country involved in the transaction.

An other important step towards the linking of domestic exchanges within the same region involves the listing of one country's enterprises on the stock exchanges of other countries and/or in the intra-regional electronic trading system. Such an arrangement may lead also to parallel listings, a phenomenon quite common in Europe. It means that, on condition that the necessary regulation is harmonized, the same company (with preferably regional business activities) is authorized to list its shares on more than one country's stock exchange at the same time. If countries mutually agree to introduce bilaterally balanced cross-border listings they can form a scheme of cross-listings.

The linking of trading processes implies the establishment of a communications network and eventual cooperation schemes among all the interested domestic actors. The custody, settlement and clearing institutions should establish, among themselves, all the necessary channels for settling the balances and transferring the ownership certificates. The settlement mechanism naturally entails the participation of central banks. The listed companies and the interested potential investors may communicate, respectively, via their chambers of commerce and their associations. Finally, telecommunications companies should reach an agreement on the future compatibility of their systems.


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