Preparing for a future without exchange controls

Genesis was commissioned by a large African securities exchange to describe how the country's current system of exchange controls affected the choices and constraints driving the decisions of market participants and issuers. Of particular interest to the client was to analyse how a change in exchange controls might affect the behaviour of market participants in a way that might be detrimental to the exchange and the products it offers.

To better understand how exchange controls affect the behaviour of market participants, Genesis identified a profile of different categories of participants and issuers across the exchange's markets and identified the choices and constraints driving the behaviour and decisions of each category of participant and issuer.

We then considered the role that exchange controls (among others) played in such a decision and identified how exchange-control policy might change in a future environment. We also considered the impact of exchange-control removal on the behaviour (choices/constraints) of categories of investors, as well as on the opportunities created for competing exchanges. We identified, at a high level, how a change in the behaviour of participants and issuers might affect the exchange's business model and profitability.