Transparency by Paganocomments fromJens Henriksson, President NASDAQ OMX Stockholm
transparencyWhat an exchange is really about! • Pre- and post-tradetransparency • Issuernon-disclosure • Opaquetrading • Issuertransparency • The exchange is the place where demand and supply of capital meet in an efficient and stable way. • Support growth of companies and the economy, create jobs. • We love transparency!
When should we not have full transparency? • Transparency is the starting point • - Market integrity • Sometransactionsneed to be less transparent • - Waivers from pre-tradetransparency • - Delayedpost-tradepublication • Largetransactions • - Equity. • - Non-equity Swedish bond market • BUT! Exemptionsneed to be clear and harmonised
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, companygroups • - Main market + First North (equities, and bonds?) • Transparencymay be betterthandetailedlegislation • CorporateGovernance in principles-basedcodes + comply or explain
Comments onTransparency • Similarto Kay review – but it focused on effeciency; from a trading perspective and a governanceperspective. • ”A largeliterature shows thathigherliquidity is associatedwith … a lowercost of capitaltofirms” • ”Whyare markets so opaque?... in manycases [intermediaries] own the platforms… Opaqueplatformsaremoreresilienttocompetition.” • Gomber and Pieron ”However, ouranalysisof 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 onTransparency • ”the faster information gets impounded in market prices: betterpricediscovery.” • ”Market platforms… are not interested in making information about the trading process availablequickly and for free.” • Weareinterested! But no incomes, no speed, and in the long run: no markets. • Three reasons” for opacity: Compliance. Tax. Information processing. • Morereasons: Fraud. Business secrets. Public anger…. • ”Information processingcosts.” • Has anybody read a wholeprospect? The fine print?