Reactionary regulation to perceived market crises will only serve to hinder market functionality.
Boston, September 27, 2011 – A new report from Aite Group examines the structure of capital markets globally, the daily volume of cash and derivatives markets across various asset classes, and unresolved stressors that, if not addressed by global policymakers, could radically disrupt established patterns of global market access. It also details how capital markets participants can transform today’s challenges into future business opportunities and how policymakers can avert a costly unwinding of market-integration efforts implemented over the past two decades.
Following an uneasy August for European debt markets, the foundations of global finance have never felt as fragile as they do today. Policymaking initiatives since 2007 have merely stalled sagging investor confidence, and the lower tolerance of bailouts makes risks graver than they were in 2008. Global capital markets are in danger of regressing to smaller regional or national markets in which financial and regulatory barriers inhibit the free flow of capital.
“The problem is that faulty, ad-hoc interconnections in global capital markets work against all connected nations when times are bad, and feed bubbles when times are good,” says Javier Paz, senior analyst with Aite Group and co-author of this report. “Investors and banks sitting on cash see those fire hazards and sensibly refuse to place assets at risk, no matter how much décor masks the danger.”
This 39-page Impact Report contains 11 figures and two tables. Clients of Aite Group's Wealth Management and Institutional Securities & Investments services can download the report.