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Banks, Exchanges, and RegulatorsGlobal Financial Markets from the 1970s$
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Ranald C. Michie

Print publication date: 2020

Print ISBN-13: 9780199553730

Published to Oxford Scholarship Online: December 2020

DOI: 10.1093/oso/9780199553730.001.0001

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Equities and Exchanges, 1993–2006

Equities and Exchanges, 1993–2006

(p.223) 11 Equities and Exchanges, 1993–2006
Banks, Exchanges, and Regulators

Ranald C. Michie

Oxford University Press

By the 1990s the pressures on traditional stock exchanges were so intense that inertia was no longer an option. These pressures included the globalization of investment, deregulation, dismantling of capital controls, cheap and rapid communication, and powerful computing, The effect was to undermine the grip that exchanges had once exerted over national stock markets. No longer were the members of exchanges the filter through which buying and selling passed because of the control they exercised over access to both information and the market. Alternative means of trading stocks were proliferating, undermining and then destroying the exclusive privileges long enjoyed by those belonging to stock exchanges. Leading this attack on the power of stock exchanges were the megabanks. As these banks grew in scale and scope, extending their activities around the globe, they were either able to internalize many transactions or trade between themselves. In the process they cut out the exchanges, bypassing, and the charges and restrictions they imposed. There had long been an ambiguous relationship between banks and exchanges, as they were both rivals and heavy users. The combination of the megabanks, interdealer brokers, and electronic markets was rendering exchanges redundant in the 1990s, forcing them to respond through diversification and mergers.

Keywords:   equities, stocks, exchanges, OTC markets, banks, trading technology, data providers

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