The 50th anniversary of ACI ‘ The Financial Markets Association was celebrated in fine style in Stockholm at its 44th World Congress. A business programme, in the finest traditions of the association’s rich history was supported by the one of the biggest trade shows in memory and was topped off by a social programme set in some of Stockholm’s most historic sites. The Congress also proved successful in raising the association’s profile, with president Godfried De Vidts taking the opportunity to raise awareness of its work ‘ as well as its potential.
Matters commenced with a spectacular opening ceremony in the Munchen Brewery a magnificent waterfront location overlooking Stockholm city. The night was kicked off with a welcome speech by J.P. Neergard of sponsor, Danske Bank, who spoke of the importance of trust in the financial markets and also that, ‘A well functioning and trusted financial market has been, and most certainly still is, a crucial condition for prosperity.’
Friday’s business session started on a strong note and developed further as the day went on. Swedish Finance Minister Per Nuder welcomed ACI in the name of the Swedish Government and spoke to the theme of the Congress, ‘50 Years of Change’. Mr Nuder also gave his views on current conditions in the Swedish economy.
A powerful panel of seven central bankers followed, this panel dealt with three inter-related topics; the impact of currency fluctuations and currency mechanisms on monetary policy; how risky can currency fluctuations be for financial stability; and the then-present situation of global imbalances and its impact on exchange rates and monetary policy.
The panel agreed that it was very difficult to predict future exchange rate movements, and as such all were fairly relaxed about the impact of exchange rate movements upon monetary policy. It obviously depended upon the type of currency mechanism being operated. It was noted however, in a floating environment, there was only likely to be an impact when exchange rates were at extreme levels and as such did not reflect fundamentals.
There was unanimous agreement that the most important element in monitoring exchange rates was understanding exactly which factors were influencing the rate, rather than the level. It was also agreed that in general, economic imbalances are a way of life in the global economy, but notwithstanding that, the panel did not agree with the belief expressed previously in some quarters that the imbalances were a ‘benign state of affairs’.
The next session discussed asset and liability management from an ethical perspective, specifically whether the ethical perspective provided a contradiction to efficient management. A very interesting session concluded that ultimately ethical behaviour reflected best practice and that good corporate governance reflects good ethical behaviour because good governance involves taking responsibility all the way through a specific process. The panel also agreed that good, ethical, governance will be judged and reflected by the most important part of the chain ‘ the end user.
Transparency with all counterparties and the implementation of efficient, solid risk controls are the keys to good corporate governance, the panel agreed. It was also pointed out that efficient markets build greater transparency and, as such, answer the calls for more ethical behaviour. It was pointed out that markets are unlikely to be 100% efficient and there are always risks of misbehaviour in the global market, however through greater training and education, employees and employers alike will be able to maintain the generally high standards in the financial markets.
Panel three discussed the challenges faced by the world’s corporations in a world witnessing increasing volatility in exchange and interest rates. There were different opinions expressed as to the value, or otherwise, of hedging exchange rate risk in corporations. Ultimately, the more certain a cash-flow was, the more likely it was to be hedged. The panel agreed, however, that on many occasions, cash-flow levels were subject to a myriad of influences from other parts of the global economy.
There were also suggestions that some companies could change their risk management policies to allay demands for ‘flatter’ returns from auditors in the new regulatory regime, although panellists did not see this being a widespread problem
Delegates and partners then joined Handelsbanken for dinner at the historic Vasa Museum which houses a reconstruction of the impressive but ill-fated Vasa ship, which sank on her maiden voyage in 1628.
Saturday morning featured a panel representing all sides of the market discuss the changing market environment in the electronic era. The panel delved into themes surrounding the impact on people’s business from the e-revolution and agreed that the evolution ‘curve’ was still relatively young. The future course of the market ‘ areas such as, whether we will have a single exchange and how do smaller banks survive in a global world ‘ were discussed, as was the increasing impact of hedge funds upon the financial markets. It was agreed that while hedge funds bring valuable business and liquidity to markets, there is a risk if the sector becomes too dominant.Â
Finally, and fittingly, ACI Sweden took delegates and partners to Stockholm City Hall for a dinner, sponsored by SEB Merchant Bank, which celebrated 50 years in song and images. Set in the grand hall which houses the annual Nobel Awards, delegates saw a very skilful weave of images from the history of ACI as well as from the wider world, interspersed with images from the world’s media as they reported the major financial events of the period, and a series of songs.
At the end of the evening, the organising committee of the 44th World Congress took to the stage to a standing ovation from all present and took part in the handing over of the ACI flag ceremony to ACI Philippines.