CAIRO: Nearly a quarter century after its establishment, the Union of Arab Stock Exchanges (UASE) held its first meeting in Cairo to discuss the impact of the global financial crisis on future market development and regulation. Dubai World's default last month also received much attention. Representatives from all UASE member countries volunteered information on the impact of the default, along with their planned reports on achievements and future goals. The recent of appointment of Secretary General Fadi Khalaf was cited by some members as the first step in mobilizing the long dormant union. The meeting was the second. The third may be the creation of a MENA Index, which, like the Dow Jones or FEAS (The Federation of Euro-Asian Stock Exchanges), would serve as a benchmark for the region. Khalaf opened the conference with a series of questions: Have we passed through the most difficult era, the period from September 2008 to March 2009? Or will the crisis continue, as did the effects of the crash of 1929 that signaled a near decade-long global depression? What are the next steps that must be undertaken to avoid similar crises? The first panel discussion, moderated by Maged Shawki, chairman of the Egyptian Stock Exchange, began with statements by the president of the Moroccan Stock Exchange and current president of the Union of Arab Stock Exchanges, Aomar Yidar. Yidar gave a history of the union and its structure, comprising most of the stock exchanges, clearing houses and brokerage firms in the region since 1982. The Secretary General of the World Federation of Exchanges, Thomas Krantz, spoke about the importance of stock exchanges as institutional providers of fair price information as creators of a market-based price, crucial to investors' ability to gauge the value of their investment. Growing almost defensive, he expounded on the benefits drawn from stock exchange markets, such as their role as "the world's largest cash withdrawal machine as providers of liquidity with neither government backing nor taxpayer funding. Although Krantz obviously has had to protect his organization and his line of work against a backlash from investors stung by market speculation, Shawki acknowledged that the importance of Middle Eastern stock markets is relatively new phenomenon. "Although they did not formerly have a core role, stock exchanges are now important, Shawki stated in his opening remarks. The decision by keynote speaker Investment Minister Mahmoud Mohieldin not to attend, due to another engagement, seemed to reflect a continued apathy towards Arab stock markets as not significant enough to merit attention, or at best individually worthwhile but so lacking in cooperation that meetings of the UASE were, and will remain, irrelevant. Yet speakers from more developed exchanges, such as the Chairman of the Istanbul Stock Exchange, Husseyn Erkan, and the CEO of the Qatar Stock Exchange, Andre Went, presented information about their markets' transformation, outlining possible strategies for other members. Went outlined the Qatar Stock Exchange's partnership with NYSE Euronext as a potential model for other markets. Although the Dubai Stock Exchange attempted a similar partnership with NASDAQ since 2005, this test run can serve as a guideline for what other markets should and shouldn't do. "Qatar's partnership with NYSE Euronext is not unprecedented. But it is the first to combine the three elements of IT sharing, stock transfer, and knowledge impart, Went explained in the second panel of the morning, "Growth, Challenges and Opportunities. Erkan went back to basics, first defining liquidity as the ability to turn securities into cash, then explaining that leverage helps to create extra liquidity. He explained derivatives as one form of leverage, then pointed out that only 10 percent of derivatives trading occurs on exchanges. The remaining 90 percent occurs as OTC transactions, or "over-the-counter finance that takes place between two stockholders. He encouraged the development of regulatory structures that will keep transactions transparent, but warned against overly regulating stock markets, which, he said, were unfairly blamed during the financial crisis. The Deputy CEO of the London Stock Exchange Group and CEO of Borsa Italiana, Massimo Capuano echoed this, saying that "this was a crisis in the banking sector, not of financial services as a whole. He emphasized the crisis as merely a symptom of global economic change. "We have seen the effect of deep transitions in economic power, with power decreasing in the West and rising in other economic centers. specifically, a deceleration of Western economies as greater regulation decreases the rate of growth in favor of long-term security, he explained. "Therefore, he concluded, "any response must reflect an awareness of these trends as much as to the specifics of the crisis. Mossimo and many of the other speakers all seemed in agreement about the need to establish regulatory oversight, such as the development of software and technologies to provide companies with improved means of self-regulation. However, no one seemed prepared to suggest a framework for a super national regulatory body to oversee the MENA region, and many were loath to even suggest such a measure. Despite ominous sounding "dark pools of liquidity, or crossing networks not apparent on order books that provide liquidity outside of the traditional exchange system, which most seemed to agree were the "black market of stock markets, the consensus among speakers seemed to be a resounding "Yes to regulation and further development efforts for stock markets, but general mumbling about actual concrete plans for regional cooperation. The second day of the conference may provide more results, if Secretary General Khalaf has any say in it. "It's time for a Middle East index, he said the night before, "and that is only the first step for the union.
