President Zhu Congjiu of the Shanghai Stock Exchange (SSE) pointed out yesterday afternoon, at the Alumni Annual Meeting of Guanghua School of Management at Peking University, that the exchange, an international industry undergoing changes at a critical stage, is facing development opportunities and fiercer competition.
Zhu said that the SSE, regarded by the public as a government agency or a securities dealer, though, was actually a market. Its basic function is to promote trading between capital-rich party and capital-poor party. On this basis, it can come up with pricing and other functions.
According to Zhu, in an era of economic globalization, there are three standards to evaluate the exchange. The first is the exchange's trading capacity, an immediate indicator of the scale of the market capitalization. For example, the total market capitalization on the New York Stock Exchange (NYSE) is US$16 trillion while that on the SSE is RMB6 trillion or more than RMB8 trillion with that on the Shenzhen Stock Exchange added. The second is the exchange's efficiency, with the market efficiency reflected on the product pricing capacity and the technical efficiency on the trading speed. The third is the exchange's attraction. In other words, what kind of main products does it offer, blue chips or trash stocks? What kind of market does the exchange provide, a mature one or an innovative one? In order to be attractive, the exchange needs the continuous innovation capacity as well as proper supervision.
Zhu also pointed out that the current global exchanges, undergoing revolutionary changes in the international arena, would have far-reaching effects on exchanges' future development. The first is the privatization of the exchange. The exchange has been changing its membership system to the company system. The second is the exchange's listing. Some exchanges are becoming profit-oriented enterprises. The third is to provide more and more products. In addition to the stocks, there are also a variety of bonds. The fourth is the merger and acquisition of the exchange. For example, the recent merger of the NYSE and the Euronext has aroused worldwide attention. Some exchanges, though without merger, have become strategic alliances to list their products on each other. The fifth is that the exchange has invested heavily in the development of the more updated trading system so as to win more business and develop more products.
