DOMESTIC FINANCIAL MARKETS: UNITED STATES
This research reviews developments in the domestic financial markets of the United States over the December 1992 December 1993 period. Developments are reviewed in the contexts of commercial bank initiatives in the financial markets, futures selling, short selling, and stock and bond activity.
Competition from mutual fund operators for the deposit accounts relied on by commercial banks has caused an increasing number of commercial banks to become active traders in financial securities. The preferred trading approach for commercial banks is the management of mutual funds. Since the deregulation of the American banking and finance sector in 1980, the assets of mutual funds managed by commercial banks has risen to well in excess of $200 billion. The increase in mutual fund assets managed by commercial banks has increased by 17.75 percent in 1993. Throughout the development of commercial bank management of mutual funds, the primary emphasis has been on money market instruments. In 1993, money market funds account for approximately 65 percent of the total assets of the mutual funds managed by commercial banks. Taxable bonds comprise the second largest asset group in 1993, followed in turn by equity stocks, and tax exempt bonds.
A consortium led by the Chicago Mercantile Exchange established Globex for the purpose of developing a round the clock futures trading system. Thus far, Globex has not lived up to its promise. In an effort to rescue Globex, Chicago Mercantile has proposed that the three member consortium surrender control of the system to a consortium of leading exchanges. Critics claim that such a move will make no difference to the success of the round the clock futures trading concept, because the concept was both ill conceived and too ambitious. The assumption underlying round the clock futures trading is that such a system would allow investors in any part of the worl...