Globalisation Flashcards
Four characteristics
Vague and different impressions
4 characteristics
Creation of new social networks across boundaries
Expansion of social relations and connections
Intensification and acceleration of social exchanges
Global frame of reference for thought and action
Very sociological
Implicitly if it affects markets and finance then it is impactful on how they work and how companies report.
Explicit view in finance
Multinational companies
Multinational banks
Stock markets reaching beyond home domiciled companies - no home base - a range of share options for employees
International bodies - regulatory - increases the likelihood that more people are going to want to buy the shares
Both in finance and beyond
Good news or bad news
70 years - trade has increased significantly and wealth because of that
14.9tr in 2010
Wealth inequality as the concept of tickle down economies has been debunked
Increased trade but increased risk
We can have global crisis as companies are not independent and markets are not independent with each other
Then you get the problem of contagion - they rise and fall all together
Black swans - Western Europe - these things do happen
Finance is driven by mathematical and if they can’t model it they don’t want to understand
The world working closer together
Increasing political focus on domestic issues
E.g America first or make America great again - Trump
UK Pm using “citizen of the world” as a term of derision and a pseudonym for tax evaders - negative comment of tax evaders
BREXIT
Which may prove that globalisation is a trend coming to an end
How does globalisation work?
Been a progression that not all of the world view as progression or as entirely positive
Many international agencies like the world trade organisation that seem to be competing for attention at times and with agendas that may not be entirely mutually supporting
United Nations and reducing poverty globally
Is globalisation of financial markets crucial for the growth of the world economy
Efficient investment (most economic activity) and consumption is keen and need trustworthy information and markets around the world for capital flows to go to the projects/companies that will generate the highest levels of wealth Whilst globally this may be true, it is in the interest of every country to find ways to attract investment which could be: Adopting high quality international rules and standards - stock markets working effectively, minority shareholders Or by offering distorting low tax rates, paying bribes or other incentives
International organisation of security commissions
Multilingual and will try to coordinate and set a minimum level
Global standards setter for global securities regulation
126 member security commissions
65 affiliate members
Branches of government or international organisations
23 associate members
Financial markets
75% of members are developing countries
Founded 1983 building on an Americas association established in 1974
International organisation of security commissions objectives
To cooperate in developing, implementing and promoting adherence to internationally recognised and consistent standards of regulation, oversight and enforcement in order to protect investors, maintain fair, efficient and transparent markets
To enhance investor protections and promote investor confidence in the integrity of securities markets through strengthened information exchange and cooperation in enforcement against misconduct and in supervision of markets and market intermediaries
To exchange information at both global and regional levels on their respective experiences in order to assist the development of markets
International organ of security commissions principles
Based in Switzerland
Endorsed by both the G20 and the financial stability board as the relevant standards for securities markets
G20
An international forum for the government’s and central banks of 19 countries in the Eu
Iosco 4 committees
President’s
Executive
Technical
Emerging Markets
IOSCO technical sub-committees
1) focuses on accounting, auditing and corporate disclosures
2) regulation of stock exchanges
3) focuses on the regulation of market intermediaries such as broke dealers, investment banks
4) focuses on cross border securities law enforcement matters
5) focuses on the regulation of mutual funds and other collective investment schemes
6) dealing with credit rating agencies
Is globalisation all about finance
Very broad topic in which there are many other organisations of which the UN is the most prominent
SDG = sustainable development goals - gender equality, decent work and economic growth, quality education.
Stakeholders, directors or shareholders
Most investment funds take this into account
Corporates are increasingly being held to account and needing to account for more than their narrow financial performance.
Annual reports - progress on trying to meet their commitments
Globalisation is a contested concept
Need it all about money or investment = IOSCO
Or the world being a “better place” which is also contentious
People get richer and people get poorer
There is a fight going on in a way.
Variety of lobbyists saying that finance has globalisation embedded within it. Some people think it’s only shareholder issue
Or is that accountability is now broadening or making them accountable which can be mutually beneficial
Shareholder need to include customers who can afford the products International stability board where everyone benefits
Tax highlights that there is bound to be a trade off
Someone has to lose in order for someone to gain
IOSCO - principle for issuers - IOSCO CODE
16 there should be full, accurate and timely disclosure of financial results, risk and other information which is material to investor’s decisions
17 holders of securities in a company should be treated in a fair and equitable manner
18 accounting standards used by issuers to prepare financial statements should be of a high and internationally acceptable quality
Safely and confidently receive all the information before investing
75% of developing markets
Fair and equitable manner
