... evolving rapidly and exchanges are facing increasing competition from each other and from independent trading systems which bypass traditional exchanges. As technology advances, the threats to the traditional exchange structure will only increase. Business will migrate to those markets with high transparency and liquidity, low costs of intermediation, diversified product base, sound regulation, high quality of service and robust infrastructure. 2. Increasingly, the power of markets will be determined by technology. Intermediation costs have been driven down, eroding the profit margin of traditional franchises. The most liquid and high quality markets must have critical mass of products, active participation of intermediaries and investors and sophisticated infrastructure to be able to compete effectively. 3. Against this background, exchanges worldwide are rethinking their strategies and operations to improve their services, reinforce their competitive position and optimise their performance. Overseas, markets are rapidly integrating vertically (e.g. linking together trading, clearing and settlement functions ...

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