The Development of a Global Securities Market
I propose to consider this topic in two parts. In the first part of this Chapter, I would like to look at the various developments that are taking place in equity and bond markets.
In the second part, I will focus specifically on the global equity new issue market in order to highlight some of the legal and procedural hurdles which still need to be addressed in creating a truly global market.
The rapid shift to a global securities market is a result of two major trends that accelerated through the 1980's and are set to continue into the next century. The first is a significant increase in the demand for a global securities market. The key source of this demand is the pool of institutional assets which have grown exponentially and have diversified internationally. The second is deregulation which has opened up the world's economies and securities markets, increasing the breadth and depth of investment opportunities.
The expected growth in the global pension fund industry is staggering. According to the InterSec Research Group, a US pension consultant, global pension funds will top $11.2 trillion in assets by the end of 1999, an increase of 59% from the $7 trillion at the end of last year (see Appendix 1, below). International investments will form the largest part of that growth, more than doubling to $1.7 trillion from $788 billion last year. To put this in perspective, the international growth represents a 464% increase from $302 billion invested outside domestic markets at the end of 1989.
Much of the increased commitment to overseas investment has and will continue to come from the major pension markets, given their dominant