Union News

Issue No. 30 (Jul - Aug - Sept 2020)

July - August - September 2020

Cover Story

Covid 19: World Market Highlights

Covid 19: World Market Highlights
According to the world federation of exchanges statistics, Covid-19 have had a severe impact across markets, increasing the volatility of all indicators, in sharp contrast with the steady trends we were seeing at the end of 2019. While January 2020 was still robust, February was less so, and in March we saw a sharp decrease in global market capitalization, together with record levels of trading activity, both in equities and derivatives. And while the second quarter of 2020 saw many indicators quickly moving towards their pre-pandemic levels, especially in June, the overall results suggest markets are still behind the levels seen at the end of last year.

In the second quarter of 2020, global market capitalization rebounded after the sharp drop in the first quarter, adding 7.25 trillion USD in just one month (April). However, global market capitalization at the end of June 2020 was down 5.1% when compared with the end of June 2019. Compared to the second half of 2019, equity markets saw record-high levels of value traded (49.7%) and volumes (47.1%). More than 12 trillion USD were traded globally over the course of Jun 2020. Overall, the number of new listings through IPOs and investment flows through IPOs fell sharply by 36.5% and respectively by 42.7% when compared to H2 2019.

Chart 1: Market capitalization

Chart 2: Electronic Order Book (EOB) value of share trading


 

Guidance on Fair & Orderly Markets as New Covid – 19 Wave Looms

Guidance on Fair & Orderly Markets as New Covid – 19 Wave Looms
The World Federation of Exchanges (WFE), the global industry group for exchanges and CCPs, issued a Guidance Note, aimed at policy questions arising from any resurgence of market volatility.

In particular, the WFE’s Guidance focuses on how exchanges create fair and orderly markets; and why, when navigating times of economic uncertainty, it is better and safer to maintain continuous visibility of asset prices and risk premia rather than suppressing markets. Understanding these issues is key to avoiding harmful public policy in relation to all three regulatory imperatives: investor protection, market integrity and systemic risk.

A key part of the role of exchanges is their operational resilience. (The same is true of CCPs.) Resilience means minimizing disruption and, where this cannot be avoided, ensuring that service is only restored in a manner that is safe and controlled, thereby preserving the interests and integrity of the whole market ecosystem.