Interviewee: Roger M. Kubarych, Henry Kaufman Adjunct Senior Fellow for International Economics and Finance
Interviewer: Roya Wolverson, Staff Writer, CFR.org
December 22, 2009
Though the New York Stock Exchange (NYSE) remains one of the world's largest stock exchanges by dollar value of the securities listed, it has faced increasing competition in recent years from foreign exchanges. Those competitors benefit from their proximity to emerging markets and electronic trading platforms such as the U.S.-based Nasdaq and BATS exchanges, which have gained a technological edge, says CFR Senior Fellow Roger Kubarych.
Hong Kong and New York are now in fierce competition for initial public offerings (IPOs) and foreign companies looking to list on an exchange, said Kubarych in a CFR.org podcast during a recent visit to the NYSE. As Asian markets in South Korea, Japan, and Singapore--which have large investible resources now--begin to diversify out of bond markets, fixed income, and currencies into equity positions, it is natural and more convenient for them to turn to familiar, more local exchanges to raise capital, he says.
The Hong Kong stock exchange is also attracting foreign companies because it has fewer regulatory requirements than in the United States, where the 2002 Sarbanes-Oxley legislation has made listing on U.S. exchanges costly and legally burdensome for many foreign firms. But even though Hong Kong is leading the global IPO movement now, Kubarych says the United States will likely catch up over the next decade because it continues to "breed a lot of joint ventures and innovative companies that have both U.S. ownership and foreign ownership." Many emerging-market companies will also continue to list on U.S. exchanges in an effort to improve their corporate governance and global prominence by abiding by the United States' more stringent rules, he says.
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