The worst forecasts of a reduction in trading and the
displacement of investments towards unregulated
instruments are fulfilled in the case of the Financial
Transaction Tax being debated in Europe, for example.
We hope that the authorities reflect on whether it is
opportune and advisable to introduce this tax, given
that its consequences would be very serious. Trading
volumes and market liquidity would be prejudiced if this
tax were introduced. It would also be difficult to apply
this tax across the board, which would nonetheless be
a requisite for ensuring it is neutral and does not distort
the market. Equally, the final outcome in this case could
be an increase in the cost of capital and, ultimately, a
reduction in investment and the diversion of funds to
other financial centres. The cost savings for issuers and
investors that it was intended MiFID would bring about
to stimulate competition, would be offset by higher
transaction costs.
That said, the opportunities presented by the markets
must not be wasted. We must continue to work under
these parameters, and with conviction, because there
remains much to do. Confidence will only be restored
through markets that are liquid, transparent and
well-regulated: the pillars on which organised markets
have historically been built within a serious and credible
institutional framework.
Companies are endeavouring to find new sources of
market-based funding, and the markets must satisfy
this demand by offering the highest possible levels of
transparency, robustness and liquidity. We are faced
with a major business, institutional, regulatory and
legal challenge.
We should heed the lessons the crisis is teaching us. Five
years of difficulties should give way to a firm commit-
ment by everyone to restore the confidence so desper-
ately needed.
Antonio J. Zoido
13
Letter from the Chairman
2
Annual
Report 2012
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