Stock exchanges and their role in financial markets : present and future developments : comparison of the Malta Stock Exchange vis-à-vis European exchanges

Abstract

Stock Exchanges world-wide play a vital role in financial markets by providing companies with the opportunity to raise capital and by giving both private and institutional investors the opportunity to invest. The increasing globalisation of economic activity, driven by advances in technology and telecommunications, is leading to a growing number of companies wishing to raise capital in more than one country. Investors too are looking at integrated, or interconnected, international markets in order to maximise their return and spread their capital risk. Long term developments such as the introduction of the euro, the spread of privatisation, the growing number of pan-European mergers and acquisitions and the rise of the retail investors, have encouraged closer co-operation and in some cases, the integration of Europe's formerly diverse and separate equity markets. At the same time, over the past decade, securities exchange world-wide have undergone a major transformation. Most have been deregulated; exchange membership has been opened up to foreign-owned intermediaries and trading is executed electronically. The current scenario for stock exchanges not only in Europe but even world-wide is therefore constantly being revolutionised and refined. Change is indeed a constant in the stock exchange world and the dynamism in which this change is occurring is becoming all the more important. The main theme behind this thesis is indeed the analysis of these changes and innovations affecting stock exchanges world-wide, with a special focus on the European region and also on the local Maltese stock exchange. Such analysis is useful in order to be able to devise a plan on how challenges and opportunities can be exploited in a changing world; besides also being able to readjust current situations to avoid change-driven threats.