After the market crash of 1987, there has been a change in market structure, specially at microstructure. The rapid changes in technology, and in regulation and deregulation of markets has led to restructuring in the institutional arrangements of the markets.
The discussion of microstructure is very important, and looking at the growth path, it appears that several key changes have occurred in the financial market. I want to share with you my thoughts on how to deal with the important microstructures. These comments are based on experiences in emerging markets in general. Before that, let me just very briefly tell you about how microstructure has grown over the last two years.
I think if you look at the issue of microstructure, you can see that seminal changes occurred during the stock market crash in 1987. After the crash, things have been lot more focused and attention has been on the inherent processes that determine the price and volumes in the marketplace. Nearly 20 years on, rapid changes in technology and equally significant changes in regulation and, of course, deregulation of markets has led to a high sense of urgency in understanding the institutional arrangement for markets; whether they are in the real world or cyberspace. The third aspect, which I think is becoming equally important, is that markets are more developed today and are competing more intensely among themselves for global investors. And thus, greater pressure is being imposed on policy makers and market viability is becoming important for gaining advantage in the markets. |
