Former SEC DG Suggests How to grow liquidity in emerging market

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Former SEC DG Arunma Oteh

The World Federation of Exchanges (WFE), which represents more than 200 market infrastructure providers on Wednesday in Cartagena, Colombia held a round table to discuss how best to grow liquidity in emerging market exchanges. The session which form part of the 56th WFE General Assembly & Annual Meeting was titled: Enhancing Emerging Market Liquidity and follows the joint WFE-Oliver Wyman paper on the issue.

Treasurer and Vice President of the World Bank, and former Director General of the Securities and Exchange Commission (SEC) Ms Arunma Oteh, spoke at the roundtable and reflected on the paper, as did regional regulators including the Financial Superintendence of Colombia, and the Comision Nacional de Valores de Argentina. The report, first published on 13 October 2016, identified three key areas that exchanges and regulators can focus on to grow liquidity.

The process include Promoting the development of a diverse investor base, increasing the pool of securities and associated financial products and investing in the creation of an enabling market environment. Chief Executive Officer, WFE, Nandini Sukumar said: It is particularly exciting to be presenting these findings in Colombia, one of the most interesting emerging markets in the world.

This report sets out a practical framework that regulators and exchange operators in emerging markets may be able to use, to grow and enhance market liquidity. Liquidity is the biggest issue for most emerging markets. It is positively associated with broader market development, often resulting in encouraging effects for the underlying economy.

Daniela Peterhoff, Partner, Global Head of Market Infrastructure, Oliver Wyman, said: We believe the ideas to emerge from the paper offer actionable solutions to tackle the issue of low levels of liquidity often suffered by many emerging markets. Ultimately each jurisdiction needs to weight those levers most suitable in its specific ecosystem, and mobilise key stakeholders accordingly.

According to a statement issued by WFE, the report was written in collaboration with Oliver Wyman, using its experience in a variety of markets; additional WFE data; and interviews and case studies of some WFE emerging market exchanges.

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