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Dr Joseph Lee, Exeter Law School and Professor Sunseop Jung, Commissioner, Financial Services Commission, Republic of Korea

Dr Lee convened an international seminar on Stock Exchange Interconnections funded by the British Academy

Deutsche Börse, Taiwan Stock Exchange, British Office Taipei, Tsar & Tsai Law Firm, China Development Financial Holdings, and Pinsent Masons LLP participated in the seminar.

On 7 October 2016, Dr Joseph Lee convened an international seminar on stock exchange interconnections at the National Taiwan University. The aim of the event was to analyse the systems and processes of exchange interconnections, identify the risks involved, and map out the legal and regulatory frameworks for cross-border interconnecting activities amongst securities transactions providers.

Dr Lee discussed synergies, risks and regulation of stock exchange interconnections. The stock exchange industry is faced with new challenges brought by technology advancement, and the industry has been through several phases of competition and consolidation. Such industrial transformation will act as catalyst to breaking through the current banking systems to bring about more innovation and more inclusiveness in the economy. 

This seminar arose out of international and interdisciplinary collaboration involving academics from Exeter (UK), Bocconi (Italy), Masaryk (Czech Republic), Singapore Management University, Kyushu University (Japan), Nagoya University (Japan), National Chiao-Tung University (Taiwan), Seoul National University, and National Taiwan University. The discussions focused on a wide range of pressing issues, including:

  • the regulation of open interest in the derivatives market while maintaining open access and interoperability
  • enhancing corporate governance by establishing e-platforms for foreign investors exercising their governance rights
  • models for regulating jurisdiction problems in capital markets
  • cross-border data transfers under EU and WTO rules
  • legal rules on industrial data protection in exchange data and index services
  • cyber security for financial institutions under EU rules and CPMI-IOSCO guidance
  • the role of financial courts and arbitration for reducing the risk of legal exposure of the central counter party (CCP)
  • regulation of cross-listings and Exchange Traded Funds (ETFs)
  • Fintech, distributed ledgers, the blockchain and their implications for the exchange industry.

The seminar expanded upon topics examined at an earlier international seminar held in London on 6 June 2016 at the British Academy, which focused mainly on practices in Europe. After the London seminar, several exchanges have launched new initiatives Taiwan Stock Exchange connected with the Singapore Stock Exchange; the merger between Deutsche Börse and London Stock Exchange is in a second phase merger clearance procedure by the European Commission.

These two seminars have shed new light on the synergies, risks, and regulation of stock exchange interconnections considering, inter alia, innovative European-Asian connecting models as developed by Eurex and KRX (Korean Stock Exchange) and the fast growing Exchange Traded Funds (EFTs).

The research project of which the two seminars form part examines many operations within the exchange industry and reveals the complex nexus of the market structure. The findings are critical for analysing the costs of the market structure, mapping out the components for regulation, reflecting on the meaning of “exchange” and devising a low-cost, resilient, and trustworthy environment to bridge businesses and the investors.

Selected papers presented in the seminars will be published in a special issue of the Journal of Law and Technology and in an edited book by Dr Lee.

Read the following link for information on the first London seminar at the British Academy.

Date: 12 October 2016

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