Stock market integration means, to us, that investors can buy and sell shares in those markets without restriction and that identical securities can be issued and traded at the same price across the markets after foreign exchange adjustment. A region can be either contiguous nations bound by trade and other links or a single nation with multiple exchanges in a federal system that allows its states to pursue different laws and policies toward capital markets. It turns out that in several regions, exchanges and their regulators have adopted different ways to deal with them. Capital markets in a region like Southern Africa would benefit from understanding how linkages in other regions of the world have developed. We believe the lessons are even more broadly relevant, that policy makers in industrial as well as emerging markets will benefit from knowing about these efforts.
Regional integration is particularly difficult even in single-country regions.
They are usually in the same time zone, so even the prospect of after-hours cooperation is unavailable. Governments do best removing barriers. The most promising areas for government action are removing official barriers, removing market barriers resulting from monopolistic or oligopolistic power, and providing a common threshold within the region for prudential and structural rules. Even removing barriers does not guarantee full integration. Governments have a harder time imposing on the markets institutions that are supposed to support integration.