Welcome to June. I write from the WFE’s CCP & Derivatives conference which caps a week of member meetings – the first time we have met as a community since January 2020. We are delighted to resume in-person meetings and welcome our members from all over the world again.
Focus this month explores some of the themes raised in these conversations.
Jos Dijsselhof, CEO of SIX Group AG and Chair of the WFE’s Working Committee, the engine of WFE’s policy and education work, shares his views on the role exchanges can play in ESG, raising capital, DeFI and building an infrastructure for digital assets; all topics we discussed at our Working Committee meeting on May 25.
Dr Daniela Peterhoff, the new president of Nasdaq Clearing and a speaker at our CCP conference, shares her vision of how the organization will grow, develop and support the financial system in a in a world where CCPs are becoming even more important as risk mitigators.
Klaus Martin Löber of the European Securities and Markets Authority maps out key areas and trends that he expects will be the focus of the CCP supervisory committee he heads.
B3's Flavia Mouta Fernandes, Fernando de Andrade Mota, Raphael Giovanini and Yasmin Fernandes Reis examine the regulatory flexibility exercised in Brazil during the pandemic and why it was so important.
Staying in Brazil, Flavia Mouta Fernandes, Fernando de Andrade Mota, Raphael Giovanini and Danilo Castanha Mariotti from B3 take an in-depth look at the implementation of SPACs in Brazil.
Finally, the WFE is delighted to publish a new research paper titled “Circuit breakers and market quality,” which studies their effectiveness during times of volatility and market stress. In March 2020, the U.S. security market experienced heightened volatility induced by the COVID-19 pandemic, and market-wide circuit breakers were triggered on four occasions. Using high-frequency intraday trade and quote data, WFE Research investigated the market conditions around these trading halts, seeking to shed light on the effectiveness of circuit breakers.
The research found that, on average, stock returns stabilize, selling pressure resolves, and prices become more informative after trading resumes from the market-wide trading halts. The paper also provides evidence that traders tend to hold back from aggressive trading right before the trading halts, which is inconsistent with the circuit breakers causing panic, the so-called magnet effect.
See you next month.
Nandini Sukumar
Chief Executive Officer
The WFE