Dr. Konstantin Saroyan, Secretary General of the Federation of Euro-Asian Stock Exchanges (FEAS), and Armenuhy Hovakimyan, Deputy Secretary General of FEAS, highlight the importance of working together and creating platforms that encourage collaboration when it comes to developing the finance scene in new markets.
Text : Konstantin Saroyan, Armenuhy Hovakimyan Photo : FEAS
ConFEAS 2023
Together with these challenges, there are equally significant opportunities: the chance to foster resilience, innovation, and regional collaboration that can redefine the financial future of these economies.
Unlocking Potential in Frontier and Emerging Markets: Challenges and Opportunities
In the dynamic landscape of global finance, frontier, and emerging markets are increasingly recognized for their potential to drive growth and innovation. These markets, often operating on the fringes of the global financial ecosystem, face unique challenges like being overshadowed by the dominant players of Wall Street, London, or Tokyo. Yet, within these markets, lies a story of untapped potential and unrealized collaborative efforts that could reshape the financial landscape if unlocked. However, together with these challenges, there are equally significant opportunities: the chance to foster resilience, innovation, and regional collaboration that can redefine the financial future of these economies.
Challenges on the Path to Development
The financial ecosystems of frontier and emerging markets often face hurdles-limited instruments, technological gaps, legal complexities, and small investor bases. While these markets are adept at identifying pathways to growth, their individual capacities often fall short of delivering the rapid transformations seen in developed economies. For instance, the combined market capitalization of FEAS member exchanges pales in comparison to giants like the NYSE.
However, this does not mean stagnation; instead, it calls for smart, strategic collaborations.
Collaboration is the cornerstone of progress for smaller markets. Here are three key ways we see the cooperation between peer markets:
Frontier and emerging markets are characterized by diversity in size, structure, and maturity. Despite their differences, these markets share common hurdles that impede their progress:
1. Strategic Partnerships with Advanced Markets: Learning from Examples
Partnering with more developed exchanges brings tangible benefits—advanced technology, shared expertise, and increased investor confidence. For example, the Armenia Stock Exchange’s (AMX) strategic partnership with the GPW Group (Warsaw Stock Exchange Group) where GPW is a 65% shareholder of AMX. While these collaborations bring benefits such as resource sharing and capacity building, they can also pose challenges, such as aligning regulatory frameworks or managing differing strategic goals. Yet, the potential for growth often outweighs these hurdles.
2. Cross-Border Links: Connecting the Region by Building Bridges
This includes initiatives like Tabadul, which integrates exchanges fostering cross-listing and investment flows across the Middle East, North Africa and expanding through the whole region of FEAS and beyond, SEE Link, connecting Southeast European markets and AELP – African Exchange Linkage Project, improving debt and liquidity in Africa’s capital markets. All these cases exemplify the power of regional cooperation. These platforms not only enhance market accessibility for investors but also pave the way for innovative cross-border products. Another initiative – Shanghai-Shenzhen-Hong Kong Stock Connect became a necessity for the involved parties. After the liberalization reform policy in China, the Stock Connect became a quasi-natural experiment. That liberalization and connection initiative improves the market efficiency of the Chinese mainland stock market.
Furthermore, settlement systems like Clearstream and Euroclear play a pivotal role in settlement and custody services by ensuring seamless post-trade processes, enabling global investors to tap into local opportunities with confidence.
Borsa City comic book 2022 / N1
3. Knowledge Sharing: Power in Unity
Knowledge sharing remains an important point for individual exchanges and country ecosystems. Events such as ConFEAS bring together diverse stakeholders for large-scale discussions, while more intimate gatherings, like the Capital Market Talks, allow for in-depth exchanges of ideas. These forums foster collaboration, generate actionable insights, and build trust among market participants. They bring together thought leaders, regulators, and practitioners to exchange ideas, identify solutions, and inspire innovation.
Financial Literacy: The Foundation of Progress
Financial literacy is a cornerstone of thriving capital markets, especially in frontier and emerging economies where knowledge gaps often limit market participation. Empowering individuals with the tools to understand financial systems not only enhances their ability to make informed decisions but also fosters trust and stability within the broader financial ecosystem. In markets where access to formal financial education may be limited, innovative literacy initiatives play a crucial role in bridging these gaps.
Across the globe, frontier and emerging economies have implemented creative approaches to improve financial understanding. In Latin America, coordinated national strategies bring together governments, private institutions, and civil society to develop accessible financial education programs. Similarly, in Africa, initiatives targeting women and youth combine workshops, digital content, and community-based learning to address unique regional needs. Programs like these exemplify how tailored education can reach underserved groups, encouraging them to engage with financial systems confidently.
Imagine the impact of a regional platform delivering customized financial education across multiple languages and cultures. Such efforts not only empower individual investors but also elevate the collective maturity of our markets. For instance, Borsa City comic books have been translated into the 7 languages of FEAS member countries: Armenian, English, Russian, Greek, Arabic, Persian and Kazakh.
The value of collaboration cannot be overstated. In a fragmented financial landscape, initiatives that unify efforts and pool resources can achieve results that individual markets cannot accomplish alone.
The Role of Federations in a Transforming World
Regional associations and federations play a crucial role in addressing the shared challenges of frontier and emerging markets. By serving as platforms for dialogue, they bring together diverse stakeholders to discuss solutions, share resources, and advocate for change. These organizations foster unity and amplify the collective voice of their members on the global stage.
The value of collaboration cannot be overstated. In a fragmented financial landscape, initiatives that unify efforts and pool resources can achieve results that individual markets cannot accomplish alone. By focusing on shared goals—such as improving market efficiency, expanding access to capital, and fostering innovation—regional partnerships have the potential to drive transformative change.
About FEAS
The Federation of Euro-Asian Stock Exchanges (FEAS) has been a catalyst for collaboration since its establishment in 1995. Representing over 20+ countries with 40+ members, FEAS unites stock exchanges, depositories, and financial institutions to address shared challenges and seize emerging opportunities by providing platforms for knowledge sharing, capacity building, and networking.
More about FEAS:
FEAS – www.feas.org
ConFEAS – www.confeas.org
Comics – www.commics.feas.org
LinkedIn – FEAS page
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