What will capital markets be like in the future?
To celebrate the 50th anniversary of the International Capital Market Association (ICMA), BBVA took part in a conference on capital markets. What will they be like in the future? According to José Manuel González-Páramo, they will be "digital and sustainable". Digital on the strength of innovation by technologies such as blockchain, automated advice and trading algorithms; and sustainable because they will help attract "green" finance.
José Manuel González-Páramo, BBVA Executive Member of the Board and Head of Global Economics, Regulation and Public Affairs, shared his view of what capital markets will look like in the coming years. "Financing the transition to a green and low-carbon economy and dealing with digital disruption are among the major challenges of our time".
He believes that "financial innovation and digitalization offer an unprecedented opportunity for capital markets to improve efficiency, better manage risks and provide more value to customers", he stated.
In his opinion, the blockchain technology shows great potential to improve efficiency in capital markets, e.g. in IPOs or security trading, which involve multiple applications and intermediaries. Also, automated financial advice using "robo-advisors" can generate economies of scale and decrease the marginal cost of this type of service. A further innovation is trading algorithms. They help to quickly process information in high-frequency trading.
José Manuel González-Páramo, BBVA Executive Member of the Board and Head of Global Economics, Regulation and Public Affairs.
As for sustainability, José Manuel González-Páramo believes that "capital markets should play a role" in facing the challenge of climate change. How? Primarily by attracting capital and funding toward green, social and sustainable bonds. Regarding this issue, he expressed his optimism about the progress in sustainable finance in Europe. "Official sector and private-led initiatives have accelerated the awareness of climate-related financial risks and the need for green financing", he remarked.
The panel on "The international capital market: challenges & opportunities" included Juan Blasco, BBVA's Global Head of Syndicate. The debate centered on the challenges faced by the markets in the last few years and on whether, given recent regulations, they will still be effective in the future. Also, the panelists considered the potential short- and long-term opportunities brought about by the development of fintechs. "Embracing changes and turning them into opportunities is pivotal for the future of the capital markets", he said.
Juan Blasco, Global Head of Syndicate of BBVA CIB, in a panel about challenges and opportunities in the international capital markets.
BBVA, sponsor of ICMA's annual conference
ICMA's annual conference is taking place on May 30 through to June 1. On its 50th anniversary, the association chose Madrid to host the event for the first time. Spain's capital city has become the meeting point for around 1,000 senior public officials, bankers and investors, law firms, academics and journalists. The future of the capital markets and the possible strategies to be implemented by the financial industry are two of the key topics addressed during the Conference.
Attended by countless public institutions such as the European Central Bank and the World Bank, as well as well-known private sector institutions, the event is sponsored by BBVA. Its aim is to discuss how capital markets will be able to keep playing an instrumental role in economic growth, sustainability and prosperity. The speakers and panelists are addressing various topics, including the major development of green bonds in a record year, the challenges for the asset management industry, regulatory issues and the integration of international financial markets. The debates also focus on the changes to bond trading after MiFID II came into effect in January 2018, and the growing momentum of the move toward digitalization and technology innovation.
About ICMA
ICMA is a commercial association of the international capital market that aims to meet the needs of a wide range of members representing the industry's buy and sell sides. The association is made up of issuers, investors, intermediaries, law firms and infrastructure providers. ICMA currently has more than 530 members in 62 countries.
Actively working with its members in all wholesale market segments, its mission focuses on addressing regulatory issues and other significant topics with a direct impact on market practices and the operation of international debt capital markets.
ICMA was crucial to the definition of the standards and rules that establish the best market practices. ICMA has close links with domestic and supranational regulatory bodies and government authorities to help ensure that financial regulations promote the capital market's efficiency and profitability.