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stocks being done in London, not, alas on my own exchange, but
right away from regulated markets. Why ? you may ask.
Because, my Lord Mayor, they are simply not prepared to do business in a home market governed by rules appropriate to the protection of small private investors but which prejudice their own business.
The effect of not facing the realities of the market place is to drive business and ultimately the market itself - into dark corners and under stones.
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I believe as vigorously as my predecessors in the value of central markets of the kind stock exchanges provide. They encourage the flow of savings into investment by creating a liquid market in financial assets. But they will be effective markets only if companies and investors want to use them. Appropriate regulation is a fundamental requirement.
The international debate about regulatory standards is currently being conducted largely by the regulators of other countries without any significant reference to those who are responsible for the markets and their efficiency. It is taking on the characteristics of a theological discussion. The theologians these days, my Lord Mayor, do not count angels dancing on pin- heads. They give them stop-watches and tell them to time trades. That is not the way to ensure market efficiency or appropriate regulation.
But enough of regulation. I turn now to the markets themselves. Here, while we can be satisfied with some of the things we have achieved, there is much, much more to do.
A better market for illiquid stocks
In our domestic equity market, for instance, many smaller companies suffer from serious lack of liquidity in the market place. Their stocks are rarely traded. To some extent, this is due to factors over which we have, and can have no control.
But we are still concerned to do what we can to reduce overall transaction costs and improve liquidity. We are therefore preparing, and will shortly publish, a prospectus proposing improvements to this part of our market place. These will exploit the flexibility our screen based market provides, to adapt our trading systems to meet the needs of the users of the market, be they companies or investors.
"A genuinely European market place"
We are also planning fundamental changes to our international market. The challenge is to turn it into a genuinely European market-place.
Some two and a half years ago, I spoke of the need for a single European equities market for professional investors in the shares of countries throughout the world. In March, 1990, in Frankfurt, I tried to fill out this concept, in floating the