Good forecast for capital

Thomas Farley, president of the NYSE Group, which includes the New York Stock Exchange, discusses confidence in the economy and capital markets, and the outlook for 2015


I often ask the many respected business leaders who visit the New York Stock Exchange (NYSE) for their company’s IPO (initial public offering) how they plan to use the capital raised.

An IPO is, after all, a seminal moment in the history of each and every company that becomes part of the global capital markets.

The answer, irrespective of industry or size of company, nearly always includes some combination of investment in people, capital assets, and research and development.

This investment often takes the form of realising strategic objectives, such as developing new technologies or products, expanding into new locations and hiring new talent in key areas of the company in order to grow.

The health of global markets provides an important indication of continued economic growth and greater opportunities for investor participation.

It has been a strong year for global equity capital markets in terms of overall public company listings, capital raised and investor participation

It is, therefore, an encouraging sign for the global economy that 2014 has been a strong year for global equity capital markets in terms of overall public company listings, capital raised and investor participation.

By the beginning of November, the top ten stock exchanges had hosted more than 720 IPOs, raising a total of approximately $175.6 billion, led by NYSE Group with $62.6 billion raised.

That’s already more than the $175.4 billion raised by the top ten in 2013.

The JOBS (Jumpstart Our Business Startups) Act in the United States, intended to encourage funding of small businesses, was a contributing factor, helping 215 companies around the world leverage the deepest and most liquid public market through reduced barriers and complexity.

The NYSE was a leading advocate and thought leader for the Act and we are thrilled with its positive impact.

Looking ahead to 2015, we expect another strong year for global equity capital markets, with technology, financials and energy continuing to be key drivers.

From a regulatory perspective, discussions are taking place in major markets on the way stocks are traded, as well as the way technology and regulations are impacting markets.

The NYSE has taken a leadership role in these discussions, with a focus on reducing the complexity of the US equity market, which we believe will better ensure that a company’s stock trades in the most fair, efficient and transparent manner possible.

We’ve taken measures unilaterally to begin reducing complexity, including reducing the number of order types, technology platforms and unique protocols that we offer to customers.

In addition to acting on our own, we are working with our fellow exchanges, regulators and market participants to find the most impactful ways to enhance market quality, which in turn increases investor confidence and creates a more attractive environment for the world’s companies to raise capital.

After all, these are their markets – a fact that we at NYSE Group are proud to uphold and represent on behalf of our nearly 2,400 listed companies, as well as all those who contribute to the capital formation process.