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Hub News Article Sep 07, 2017

Stock Exchanges Fostering Economic Growth and Sustainable Development

The United Nations Conference on Trade and Development (UNCTAD) published today a report examining the role of stock exchanges in promoting economic growth and sustainable development, with the World Federation of Exchanges (WFE), which represents more than 200 market infrastructure providers including exchanges and CCPs.

The report, entitled The Role of Stock Exchanges in Fostering Economic Growth and Sustainable Development, was officially launched at the opening session of the 57th WFE Annual Meeting in Bangkok, Thailand. The report explains how stock exchanges operate, and why they matter; longer-term developmental challenges; and finally, how exchanges might be able to address some of those challenges.

"Stock exchanges are an important part of the global investment chain and can be instrumental in helping mobilise the massive amounts of investment needed to achieve the United Nations Sustainable Development Goals. They can also serve as a unique platform for promoting responsible business and good corporate governance. Indeed, they have already made remarkable progress in this respect,” said James Zhan, Director, Investment and Enterprise, UNCTAD, and Editor in Chief, United Nations World Investment Report. “We will continue to support stock exchanges worldwide, in close collaboration with The World Federation of Exchanges and their stakeholders, in their efforts to promote investment in economic growth and sustainable development."

“Exchanges exist to foster economic development and safeguard the financial system. Well-functioning exchanges enable economic growth and development, and can only do this within an environment that is regulated, secure, transparent and equitable,” said Nandini Sukumar, CEO, The WFE. “Part of the reason the WFE and UNCTAD did this report is to better understand the specifics of how exchanges contribute to growth. For us, it’s the beginning of a journey. We hope this joint report with UNCTAD serves as a baseline to work towards the creation of more enabling environments globally.”

Key findings of the report:

The report identifies two primary mechanisms through which stock exchanges can contribute to development:

  • Mobilising resources, both domestic and foreign portfolio flows, for sustainable economic growth and development. In addition to the core financing function of exchanges, the report also looks at what exchanges are doing to improve SME access to finance through dedicated markets, and to marshal funds to address sustainability challenges.
  • Promoting good governance in business practices, through the promotion of greater disclosure from their listed companies, including Environmental, Social & Governance (ESG) disclosure.

The ability of exchanges to perform these roles is dependent, however, on the existence of an enabling environment, comprising relevant policy, processes and institutional structures. The report has therefore developed a framework for stock exchanges and stakeholders that can be used as a preliminary guideline.