Innovate to lead, cooperate to build
Mr WU Qing is Chairman of the Shanghai Stock Exchange. On 7 September 2017, Mr WU Qing was elected Chairman of the WFE, and here he writes about how we can all work together to make our industry greater.
Since its founding in 1961, the WFE has become one of the most important organisations in global capital markets and played an increasingly bigger role in global financial governance. In modern capital markets, exchanges are vital infrastructure at the core of market operation. Over the past two decades, much has changed in our industry. Technological improvement, regulatory reform and financial innovation have reshaped its landscape and diversified the models of governance and business of the WFE members. All exchanges, whether advanced exchanges from mature markets or fast growing exchanges from emerging and frontier markets, share the same responsibilities: to serve as a bridge linking issuers, investors and intermediaries, to promote capital formation, to foster economic growth, and to maintain market stability.
As an old Chinese saying goes, “Those who do not plan for the future will find trouble at his doorstep.” While our organisation faces industry-specific challenges, we also share the challenges of the entire humanity. Problems of climate change, imbalanced development and poverty remain severe; anti-globalisation sentiments and trade protectionism are escalating; financial risks and crises still loom large. As a hub of the financial market, our industry is a great industry, but we should play a more positive role in dealing with those challenges and promoting harmonious development. By doing so, we can make this industry even greater. But how to make our industry 'greater'? I would like to share with you five keys.
The first key is to go green. We should develop green finance to facilitate green development and respond to global climate change. As Chinese President Xi Jinping pointed out, “clear waters and green mountains are as valuable as mountains of gold and silver.” Many WFE member exchanges have become pioneers in developing green finance. Earlier this year, the Shanghai Stock Exchange joined the Sustainable Stock Exchange initiative of the United Nations. 40 of the 66 members of the WFE are also members of this initiative. I suggest we share our experience, strengthen practical cooperation, and invite more private capital into green industries and programs, so as to promote sustainable development of the world economy, and also protect our homeland.
The second key is regulation of the market. Exchanges are not only market operators but also front-line supervisors. In the future, the WFE may encourage members to share front-line regulatory experience on how to maintain market order and stability. The WFE also plays a significant role as a coordinator and communicator between our industry and international regulatory organisations, which facilitates effective regulation of international capital markets to prevent systemic risk.
The third key is economic growth and innovation. Guanzi, an ancient Chinese philosopher, once said that men “shall not be obsessed with past glory. Instead, they should change according to the trend of time.” By constantly innovating the business model and exploring new territories of business, we can grasp new opportunities and reduce the financing cost for issuers and trading cost for investors, and make the market more efficient and transparent.
The fourth key is alliance. We should promote win-win cooperation and enhance inter-exchange collaboration. From our own example, in 2014 the Shanghai Stock Exchange and the Hong Kong Stock Exchange jointly launched the Shanghai-Hong Kong Stock Connect. The SSE is now working with the London Stock Exchange on Shanghai-London Stock Connect. In addition, we are exploring ways to cooperate with exchanges of the Belt and Road countries to improve financial connectivity. The WFE is a family for global exchanges. We should make better use of it by expanding it, sharing our experience on it, and exploring opportunities of cooperation with it.
The final key is technology. Fintech, represented by big data, blockchain, cloud computing and artificial intelligence, is reshaping our industry in every aspect from trading, clearing and settlement to supervision and service. Technology could also be potentially disruptive. As the Chinese proverb goes, “One prospers in worries and hardships, and perishes in ease and comfort.” We need to conduct thorough study and explore ways to apply the latest fintech. We do not shy away from these challenges, we welcome them!
Our industry plays a vital role in global finance. With the five keys that I mentioned, let’s achieve common development through closer cooperation. Let’s find better ways to facilitate economic growth, fulfill our social responsibility and create a world of common prosperity. Let’s make the exchange industry great!