The regulatory initiatives now being enacted could prompt a decline in the range of investment products on offer for investors in the future, Martin Scheck, chief executive of the International Capital Markets Association (ICMA) has warned.
Dramatic structural changes and the European sovereign debt crisis are making it increasingly difficult to predict what capital markets will look like in the future. But most agree that regulation will be the major driver of change.
Speaking at this week’s ICMA 44th annual conference in Milan, Scheck said regulatory changes now being enacted could change the way the markets operate for years if not decades into the future.
Demographic issues faced by aging western populations and the associated pension problems would also influence change in global capital markets going forward, he said. In February, for example, Slaughter and May announced it had advised AEGON on its €12 billion longevity swap with Deutsche Bank - a transaction which was based on Dutch population data.
The ICMA will be actively looking at the flow of funds into the emerging markets, with China and Russia named as specific points of interest. ICMA chairman, Cyrus Ardalan, said the Association would also prioritise the establishment of a greater degree of transparency in the terms and conditions of sovereign debt documentation.
Scheck said these factors would require market practices to evolve if capital markets were to continue to channel funds from those who have them to those who need them.
Meanwhile, UBS’ global head of capital markets, David Soanes, believed the market looks exactly as it should, considering the situation and the extraordinary amount of liquidity that has been injected.
"If I were to summarise the capital markets overall, I''d say that what''s rich is getting richer and what''s cheap is getting cheaper," he said.