Rapid Change in Financial Markets and Financial Technologies: Issues and Implications in Governance and Regulation
| Published date | 01 January 2015 |
| DOI | 10.1177/0019556120150104 |
| Author | S. Sudhakar Babu,N.A. Francis Xavier |
| Date | 01 January 2015 |
| Subject Matter | Article |
RAPID CHANGE IN FINANCIAL MARKETS
AND FINANCIAL
TECHNOLOGIES:
ISSUES
AND IMPLICATIONS IN GOVERNANCE AND
REGULATION
S.
SUDHAKAR
BABU AND N.A.
FRANCIS
XAVIER
The changing nature
of
financial transactions
and
.financial
markets,
triggered
significant
new
risks
and
new
risk
combinations, created
by
globalisation
and
intensive use
of
technology.
As
the traditional risks have not disappeared, the
overall risk level
of
financial system has increased.
The
article
traces this transformation in the .financial markets
at
the global
level
and
attempts
to
look
at
the challenges that new .financial
technologies pose
for
regulators, governance
and
investors. It
also attempts to trace the impact
of
new technologies on India
and its implications
for
regulators in India.
INTRODUCTION
THE
LAST three decades have seen the exponential growth
of
the
financial markets
and
financial products. This 'financialisation' has led
to an increase in the depth as well as reach
of
the financial markets.
It
has
led to the rise
of
new institutional players who command huge resources.
Till about the 1980s, risk was essentially borne
by
banks while the past
two decades have seen risk being spread out to new institutional players
such as pension funds, hedge funds and private equity. This period has seen
the transformation
of
the financial markets (which are thought to provide
financial services) to those that are themselves commoditised. This article
traces this transformation in the financial markets at the global level and
attempts to look at the challenges that new financial technologies pose for
regulators, governance and investors. It also attempts to trace the impact
of
new technologies
on
India and implications for regulators in India.
Trading in the Pre-Internet Era
Financial markets have aided business transactions (and speculation)
in one form
or
another for more
than
a thousand years.
The
world's
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