At a meeting organized by CEPR and Banque Paribas in Paris on 10 May, Marco Pagano presented a paper on `Trading Systems in European Stock Exchanges: Current Performance and Policy Options', written jointly with Ailsa Roell. The paper was published in April in Economic Policy No. 10, the second of two special issues devoted to the effects of the integration of the EC internal market in 1992 (available for £10.50 from the Journals Publicity Department, Cambridge University Press, The Edinburgh Building, Shaftesbury Road, Cambridge, CB2 1BR, tel: 0223 325807). Hospitality and financial support for the meeting were provided by Paribas, which is also sponsoring the continuing publication programme of the European Network in Financial Markets, administered by CEPR on behalf of the European Science Foundation.
Marco Pagano is a Research Fellow in CEPR's International Macroeconomics programme. In his talk he considered the implications for the development of the European stock exchanges of the deregulation of financial markets and the liberalization of international capital flows. He discussed a variety of issues relating to the design of market operations on the basis of a detailed analysis of the experience of both European and North American exchanges. In particular, he assessed the relative merits of auctions versus market-making, concentration versus fragmentation of trading, batch auctions versus continuous markets, and single- versus dual-capacity dealers.
He also assessed the implications of these new developments for the relative competitiveness of European financial markets, and concluded that although much trading activity had moved to London in the wake of the `Big Bang' of 1986, several continental exchanges have recovered lost ground in the wake of their own subsequent deregulations. The process of concentration towards London will be slowed down significantly as a result.
Pagano's paper introduced a panel discussion on the theme of `Innovation and Liberalization: A Comparison of the European Stock Exchanges', which was chaired by Carl Gewirtz, Associate Editor of the International Herald Tribune. The other panel speakers were Claude Bouvet, Vice President and Director General of Courcoux-Bouvet, and Sheila Nicoll, Head of the European Affairs Unit at the International Stock Exchange.