Summit Notebook
Exclusive outtakes from industry leaders
NYSE if Grasso were in charge? Bankrupt, says Liquidnet CEO
The emergence of off exchange stock trading in the United States in the past 10 years has eaten away at the market share of the New York Stock Exchange and Nasdaq by breaking their duopoly.
But those two U.S.-based exchanges have had strong management to help them weather the storm, Liquidnet CEO Seth Merrin said at the Reuters Global Exchanges and Trading Summit.
Europe only last year began to allow competition for stock trading with the introduction of new European Union rules known as MiFID, which have forced the London Stock Exchange to slash prices.
But Merrin said that exchange CEO’s used to operating in a monopoly or duopoly are ill equipped to help navigate their businesses in a more competitive environment.
Is the financial crisis the impetus Kuwait needs for reform?
If there is a silver lining to the impact of the credit crisis in Kuwait, it could be highlighting the poor transparency – even by Gulf Arab standards – in the desert country.
Other Gulf countries such as the United Arab Emirates or Saudi Arabia have taken steps to crack down on corruption or boost transparency in a region where stock prices often move sharply before major company announcements. Most – but not Kuwait — have independent stock market regulators.
Once a regional leader in developing financial markets, Kuwait has fallen behind its neighbours. It would have been almost impossible for investors to discern problems at Kuwait’s Gulf Bank before its rescue last month, economists say.
Lack of transparency can often hide corruption, said Amani Bouresli, finance professor at Kuwait University.
“In terms of corruption, there is the perception of corruption index and every year we have a worse location than the year before,” she said.
The global crisis may add pressure on Kuwait to act, Bouresli said.
“When the index is red you see the government acting,” she said. “I hope if the index goes up again the government won’t stop acting.”
But more decisive measures on disclosure might be too bold a step to expect from Kuwait’s current government. Some have suggested that battles between the government and parliament in Kuwait, perhaps the most democratic of the Gulf Arab states, could hinder the type of action that would be necessary.
“The government knows there is a lot of corruption, but it is weak and unserious,” Kuwaiti economist Naser Alnafisi said.
