WFE statement to G-20 Finance Ministers for November 2011

WFE statement to G-20 Finance Ministers for November 2011 


Mr. Etienne Oudot de Dainville

Sub-Director for Corporate Financing and Capital Markets

Ministry of Finance



28 October 2011 


Dear Mr. Oudot de Dainville,


In the context of France’s G-20 presidency, this July we spoke about the work of regulated exchanges, and the roles they play in financial stabilization and economic growth: primary market capital formation, asset pricing, refinancing debt, and risk lay-off.  

Further to our conversation, the members of the World Federation of Exchanges respectfully submit this text for your consideration in the final G-20 communiqué for November. As we send this to you, we are also circulating it among the exchanges in all G-20 countries, for them to share with their authorities.   


1.    We recognize, as did the G-20 leaders meeting in Pittsburgh in 2009, that numerous policy adjustments are required in order for the global financial system to regain its role in promoting strong and balanced economic growth.   

2.    We note, as in previous G-20 statements, that the regulated exchange environment, which provides investor safeguards such as fair and transparent price discovery and certainty of execution, makes a solid foundation for financial regeneration. Accordingly, G-20 leaders have endorsed the role of exchanges and their clearing and settlement infrastructures as much more reliable alternatives to over-the-counter unregulated trading of derivatives contracts. We believe that the role of regulated cash and derivative exchanges should now be leveraged further to aid in global financial reform and economic recovery.

3.    We call upon regulated exchanges to be the marketplace of choice for refinancing public and private sector debt and for raising long-term equity capital as part of the deleveraging required for the world’s balance sheets. Availability of liquidity and the risk lay-off mechanism provided by exchanges are especially beneficial for the investing public and business in this period of financial and economic transition. The need for rebuilding is evidenced by the fall-off in the world’s equity capital base, even during this past decade of growth.[1] Liquidity on cash markets has also fallen sharply.[2]

4.    We recognize that the dangers of fragmented capital markets structures highlighted by the global financial crisis still exist in many G-20 countries, where venues that provide exchange-like services without exchange safeguards and without high regulatory standards compete with regulated exchanges. Prices in these fragmented environments are inadequate and unclear sources of information for asset and risk valuation, and for the long-term capital formation considerations of corporations and the investing public. This is particularly true of small and medium enterprises, which are the largest employers in most economies. The recent and current financial crisis has also resulted in SMEs being shunned by the banks due to lack of liquidity. Deep exchange liquidity must be restored to reduce systemic risk and foster refinancing, and this will require marketplace integrity.

Therefore, the G-20 Finance Ministers should:

1.      Encourage public and private sector use of regulated cash and derivative exchanges as the marketplace of choice for financing debt and capitalizing enterprises, particularly SMEs, in order to support market efficiency and sustain balanced economic growth that will lead to more job creation;

2.      Agree that such encouragement will enhance the public good by providing qualities of fairness and clarity for governments, corporations and investors as the financial system gets rebalanced; 

3.      Welcome the collaboration of the World Federation of Exchanges to draw on the diverse expertise of regulated exchange operators around the world;

4.      Encourage national regulators and standard-setting bodies to work with the international policy-makers at IOSCO to harmonize laws and rules governing the public capital markets, in order to minimize the effects of regulatory arbitrage;

5.      Request the World Federation of Exchanges to evaluate progress made in raising capital and restoring liquidity on central regulated marketplaces, and to submit its report to the G-20 Finance Ministers in advance of the [June] meeting of ministers in 2012. 

The chairman joins me in expressing thanks for your careful consideration.  



Thomas Krantz                                                          Ronald Arculli

Secretary General                                                      Chairman of WFE

Chairman of Hong Kong Exchanges and Clearing



Persons copied for further action with their national authorities:


Argentina:                   Hector Orlando, Bolsa de Comercio de Buenos Aires

Australia:                   Robert Elstone, Australian Securities Exchange

Brazil:                         Edemir Pinto, BM&FBOVESPA

Canada:                      Thomas Kloet, TMX Group

China:                         Geng Liang, Shanghai Stock Exchange

China:                         Dongzheng Chen, Shenzhen Stock Exchange

France:                        Dominique Cerutti, NYSE Euronext Paris

Germany:                    Andreas Preuss, Deutsche Boerse Group

India:                          Madhu Kannan, Bombay Stock Exchange

India:                          Ravi Narain, National Stock Exchange of India

Indonesia:                   Ito Warsito, Indonesia Stock Exchange

Italy:                           Massimo Tononi, Borsa Italiana

Japan:                          Michio Yoneda, Osaka Securities Exchange

Japan:                          Atsushi Saito, Tokyo Stock Exchange Group

Mexico:                       Luis Téllez, Bolsa Mexicana de Valores

Netherlands:              Joost J. M. van der Does de Willebois, NYSE Euronext Amsterdam

Republic Korea:         Bongsoo Kim, Korea Exchange

Russia:                        Ruben Aganbegyan, MICEX

Saudi Arabia              Abdullah Saleh Alsuweilmy, Saudi Stock Exchange Tadawul

South Africa:             Russell Loubser, Johannesburg Stock Exchange

Spain:                         Antonio Zoido, BME Spanish Exchanges

Switzerland:              Urs Rüegsegger, SIX Swiss Exchange

Turkey:                       Huseyin Erkan, Istanbul Stock Exchange

UK:                             Xavier Rolet, London Stock Exchange Group

USA:                          William J. Brodsky, Chicago Board Options Exchange Holdings

USA:                          Craig Donohue, Chicago Mercatile Exchange Group

USA:                          Jeffrey C. Sprecher, Intercontinental Exchange

USA:                          Gary Katz, International Securities Exchange

USA:                          Meyer S. Frucher, NASDAQ OMX Group

USA:                          Duncan Niederauer, NYSE Euronext



WFE Working Committee for information.

[1] According to World Federation of Exchanges and IMF data, the ratio of equity market capitalization to member states’ GDP declined sharply over this past decade, from 112% in 2001 to 67% at the end of 2010. Given good economic growth over the period, the figures underscore the scale of the debt that will need refinancing and the potential for equity issuance needed to underpin market economies.

[2] The velocity of trading on cash equity markets has slowed.  In 2010, the cash equities average turnover was 108 %, whereas in 2001 the figure stood at 143 %. The 2010 figure includes on-exchange cash trading only; in the fragmented environment instituted by the authorities in many jurisdictions, trading is taking place off-exchange. WFE is not aware of any body collecting these total figures based on common statistical definitions.


Report Date: 
Fri, 10/28/2011