Global financial markets liquidity: is it running dry?

The event started with a presentation of the main findings of the recently published PwC’s Global financial markets liquidity study, which reviewed liquidity trends and prospects across a broad range of asset classes and international markets. This was followed by a panel discussion and Q&A session. Please find below details about the event.

Description

The sudden drying up of market liquidity as the financial crisis took hold and various subsequent liquidity events in recent years showed the complexity of policy responses to preserve favourable market liquidity conditions. Today’s combination of monetary stimulus, low interest rates environment, and strong asset values would suggest that financial markets may enter into a path of long-term structural changes. Current levels of market liquidity do not seem alarmingly low, but a decline in market liquidity in some financial instruments has risen doubts about the direction of this process. On the one hand, tighter regulations and balance sheet constraints seem to have prompted major banks to change their business models and shrink their trading inventories. On the other hand, asset managers, insurance companies and pension funds have been increasing their holdings of higher yielding, riskier financial instruments.

Questions

How has market liquidity evolved in key advanced and emerging markets in recent years? What cyclical and structural factors have driven these developments? What is the importance of post-crisis regulatory reforms across banking and capital markets compared to monetary policy actions? Have these reforms, some of which are yet to be implemented, already induced changes in the trading and investment behaviour of market participants? Does the highly accommodative monetary policy stance conceal the build-up of fragilities? Is there conclusive evidence of market liquidity deterioration in certain market segments (e.g. fixed income) due to the scaling back in the dealers' trading activities?

Speakers

• Nick Forrest, Director, Economics and Policy Practice, PwC UK
• Nikolaos Panigirtzoglou, Analyst, Global Market Strategy, J.P. Morgan Securities
• Christian Winkler, Team Leader – Markets and Investors, Risk Analysis and Economics, European Securities and Markets Authority
• Andrei Kirilenko, Visiting Professor of Finance,  Brevan Howard Centre for Financial Analysis, Imperial College Business School

Moderated by Diego Valiante, Head of Financial Markets and Institutions, CEPS

Registration

• Registration is free of charge for ECMI/CEPS members, EU/national officials, full-time academics, PhD students (subject to seats availability), NGOs (not representing industry sectors or a commercial interest) and press
• Other participants may be admitted for €175 (VAT included, payable in advance or at the registration desk)

A sandwich lunch will be served from 12h30 onwards.