Electronic commerce and wholesale financial services

Published date01 January 2001
Pages81-89
Date01 January 2001
DOIhttps://doi.org/10.1108/eb025064
AuthorTimothy Baker
Subject MatterAccounting & finance
Journal of Financial Regulation and Compliance Volume 9 Number 1
Electronic commerce and wholesale
financial services
Timothy Baker
Received (in revised form): 21st November, 2000
London Investment Banker's Association, 6 Frederick's Place, London EC2R 8BT.
Timothy Baker is a Director of the London
Investment Banking Association (LIBA).
LIBA represents the views of firms active
in London's investment banking and secu-
rities trading industry. His responsibilities
at LIBA include coordination of policy on
e-commerce and on many aspects of
Eur-
opean financial services legislation. He
joined LIBA at the beginning of 1999,
having previously spent eight years at the
Securities and Investments Board (now the
Financial Services Authority).
ABSTRACT
International wholesale financial markets have
long been used to exploiting the cutting edge of
technology to find more efficient ways of
doing
business. But now new electronic technologies
are changing the
structure
and dynamics of
mar-
kets themselves as
seldom
before, and the rate of
change is increasing. To enable financial mar-
kets and the investors and entrepreneurs who
use them to obtain maximum benefit, govern-
ments and regulators need to be careful not to
constrain these developments by
reference
to tra-
ditional structures and
standards
which may no
longer be appropriate. They should instead
embrace the benefits which change brings, and
radically re-examine legal and regulatory frame-
works in the light of the evolving
landscape
of
opportunity and
risk.
This re-analysis should
take into
account
that the
transparency
and com-
petitiveness of
e-commerce
is bringing about a
new alignment between investor protection,
market stability and commercial advantage.
Policy should be developed in partnership with
users of the markets. The authorities will also
need to take into account how new technologies
are, as never before, globalising world markets
competitive advantage will go to wherever
the most market-friendly equilibrium is struck
and maintained between commercial freedom
and regulation.
HOW ELECTRONIC COMMERCE IS
CHANGING FINANCIAL MARKETS
Major investment banks, with their inter-
national branch networks giving world-
wide clients access to worldwide capital
markets, have long exploited cutting-edge
technology to obtain competitive advan-
tage.
In recent years however, new devel-
opments in the application of electronic
technology have transformed financial
markets, and are continuing to do so.
These changes are diverse and often pro-
found in both their effects and implications:
on traditional exchanges electronic
trading has superseded other dealing
methods, increasing trading volumes;
clearing and settlement have followed
suit
alternative trading systems and other
electronic communications networks,
exploiting the lower barriers to entry in
an electronic marketplace, have arisen
to provide facilities for on-line trading
Journal of Financial Regulation
and Compliance, Vol. 9. No. 1,
2001,
pp.
81-89
© Henry Stewart Publications,
1358-1988
Page 81

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