in the world ’ s most mature equity market, the united states. equity market turnover in the us has risen nearly fourfold in the space of a decade. put differently, at the end of the second world war, the average us share was held by the average investor for around four years. by the start of this century, that had fallen to around eight months. and by 2008, it had fallen to around two months. what explains this story? regulation is part of it. two important, and almost simultaneous, regulatory developments on either side of the atlantic changed fundamentally the trading landscape : in the us, regulation nms ( national market system ) in 2005 ; and in europe, mifid ( markets in financial instruments directive ) in 2004. though different in detail, these regulatory initiatives had similar objectives : to boost competition and choice in financial market trading by attracting new entrants. central exchanges for the trading of securities evolved from the coffee houses of amsterdam, london, new york and paris in the 17th century. from those foundations emerged the physical exchanges which dominated the period from the 18th right through to the 20th centuries. central trading exchanges maintained their near - monopoly status for 300 years. in the space of a few years, that monopoly has been decisively broken. a diverse and distributed patchwork of exchanges and multilateral trading platforms has emerged in its place. these offer investors a range of execution characteristics, such as speed, cost and transparency, typically electronically. equity market trading structures have fragmented. this has gone furthest in the us, where trading is now split across more than half a dozen exchanges, multilateral trading platforms and “ dark pools ” of anonymous trading ( charts 3 and 4 ). having accounted for around 80 % of trading volume in nyse - listed securities in 2005, the trading share of the nyse had fallen to around 24 % by february 2011. a similar pattern is evident across europe. in the uk, the market share of the london stock exchange has fallen from two - thirds in june 2008 to less than one third today ( charts 5 and 6 ). the same pattern is found in germany and france. in asia, there is as yet less fragmentation. arestis and demetriades ( 1997 ). bis central bankers ’ speeches accompanying this structural evolution in trading has been a technological revolution. electronic trading is not new. the first electronic exchange ( nasdaq ) is already over forty years old. but advances in computing power have shifted decisively the frontier of

jean - claude trichet : taking stock on financial reform opening speech by mr jean - claude trichet, president of the european central bank, at the frankfurt finance summit, “ the future of risk management and regulation : smarter regulation, safer markets ”, frankfurt am main, 23 march 2011. * * * ladies and gentlemen, i am very pleased to be able to open this conference here at the house of finance in frankfurt. frankfurt now hosts three european institutions : the european central bank ( ecb ), the european insurance and occupational pensions authority ( eiopa ) and the european systemic risk board ( esrb ). this city is now the home not only of europe ’ s monetary authority, but also of important supranational responsibility for supervisory matters. with the eiopa and the esrb, frankfurt hosts half of the european bodies in the new european system of financial supervisors, with the other two european supervisory agencies ( esas ) – the european banking authority ( eba ) and the european securities and markets authority – based in london and paris respectively. i have looked with great interest at today ’ s programme, which is of exceptional quality. in my opening remarks, i would like to lay out a scheme of the building blocks of the financial reform that is still in progress. i believe that when we look back in a few years on the financial reform following the global crisis, we will identify three main building blocks : the first is banking regulation. the global community is making a big step forward here. it has made the right diagnosis and, in the basel iii framework, drawn the appropriate lessons. my friend nout wellink is chairing the basel committee ; i myself have the privilege of chairing the committee of governors and heads of supervision, which provides guidance to the basel committee. the second building block is regulation of the financial markets. here, reform must ensure much greater transparency for the various market segments and products, ensure sufficient competition in all markets, and attenuate as much as possible the pro - cyclicality that derives from information asymmetries, structural features such as ratings and market phenomena such as herding. the third building block is macroprudential oversight. this new discipline focuses on the interactions between the various parts of the financial system and between the financial sector and the real economy. new institutions, including the esrb and equivalent oversight committees around the world, will pursue the task of identifying sources of systemic risk, issuing early warnings and recommending remedia