Approaches to Market Regulation -- The United Kingdom
MICHAEL J. PERRY
Until comparatively recently, an examination of approaches to market regulation in the United Kingdom would have primarily focused on the London Stock Exchange ( LSE) as the predominant market. The LSE continues to have a pre-eminent role in the equity market place, both as a dominant force in the cash market trades of UK equities and as the leading international exchange for the trading of foreign shares. However, the market place has moved beyond the traditional concept of the central market in an Organisation sense and UK investors (both institutional and retail) have a wider range of options to consider with regard to the market in which they may deal.
Firstly, the recognised exchanges in the UK look set to increase. At present there are exchanges for commodities ( London Commodities Exchange LCE), metals ( London Metals Exchange LME) and oil ( International Petroleum Exchange IPE), the London International Financial Futures Exchange ( LIFFE) is the exchange for futures and options, OMLX is the exchange for Scandinavian securities derivatives and Trade-Point has just been recognised by the Securities and Investment Board ( SIB) as an exchange which will provide for its customers an order driven dealing service in securities. The likelihood is that the number of recognised exchanges will increase since, as will be discussed later on, the UK regulators, whilst not promoting competition, nevertheless wish to ensure that investors have the freedom to choose.
Secondly, over the counter (OTC) markets have developed strongly which primarily cater for institutional/professional customers who require a customised product (whether for hedging or otherwise) which is not available on an exchange. OTC derivatives are a well known example of instruments that are dealt in off-exchange.
ISDA (The International Securities Dealers Association, formerly AIBD)