Derivatives volumes in Scandinavia has suffered in recent years, but as David Wigan found out, innovation in the region could help restore its fortunes.
Liquidity begets liquidity, financial market wisdom
dictates, but the opposite is also true: lack of liquidity
begets dead markets – a fact to which operators of
Scandinavian derivative exchanges, based on recent experience,
will readily testify.
Out on the fringes of the European continent, the
environment is at its most fragile, meaning the impact of
upheavals in the global financial markets have been more keenly
felt than in more highly populated centres.
The combined effects of the European debt crisis and
regulatory clampdowns have undermined derivative liquidity, and
as weaker competitors have fallen by the wayside, only the
biggest and most specialised have thrived.
With proprietary trading in Europe expected to be restricted
under the Basel III framework (though perhaps not to the same
extent as in the United States) institutional derivative
business has come under pressure, particularly in centres where
investors and banks do not trade large amounts of underlying
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