At this point of time many articles refer to the tragic events of 11 September last year and are trying to describe or assess the consequences of that event for their respective businesses. The question is if 11 September was the main factor behind all kinds of developments or the catalyst of existing trends.

It goes without saying that this date has, had and will have, a dominating influence for a long time on the way we conduct our business, in particular because of the potential medium-term political consequences. The danger of a major armed conflict is not a positive factor for the economy and the attitude of consumers and producers alike. But apart from these important factors we have not yet experienced a dramatic decline in volumes and volatilities in the foreign exchange markets. The recovery of the Euro had been predicted for quite some time and the volatility in other currency pairs created enough trading opportunities.

It seems that FX products have again become an asset class in itself which attracts old and new investors as the equity markets have not performed that well, to put it mildly. Also the pricing of FX products is not dependent on creative accounting, the quality and the so called independent view/recommendation of an analyst and the lack of transparency in the market. Moreover, in spite of a slight decline in volumes see BIS report of April 2002 the FX markets are too big to be manipulated, apart from some emerging markets.However, measures taken by some authorities during the last couple of years to prevent any further speculation against their currency might have taken away some risk appetite of market participants.

What kind of role is Cyber trading playing in this context ? NONE whatsoever! Cyber or e-trading is an instrument, a tool like a telex in the old days and/or - still - the telephone nowadays. The failure of one of the multi-bank portal trading systems is an indication that e-trading doesnt create a market in itself. The technology behind it is important, in terms of speed, accessibility and costs. Just like after the introduction of the first electronic trading systems, e-trading will play an important and positive role in the development of any market, including the FX market. Authorities or anti trust agencies should realise that these systems are just one of the alternatives which can be used by any customer or bank. A customer or a bank will never completely rely upon one tool or instrument in order to get the best available price in the market. If they do, it is their choice, nobody will force them to do so. E-based trading systems with STP possibilities are a must for smaller and medium sized deal tickets in terms of operating costs etc. Big deal tickets are still being done with friends over the telephone, at least you can discuss and negotiate the terms.

Exactly 10 years ago Europe faced the first major crisis in the ERM system followed by another one in September 1993. It was also 10 years ago that the last two tier foreign exchange system in Europe was abolished: the financial and commercial Belgian franc. Since than we had several currency crises all over the world: Mexico 1994-95, Asia 1997-98, Russia 1998, Brazil 1998-99, Turkey 2000-01 and Argentina 2001-02. All countries had different currency regimes but none of them used the old European way of exchange controls: two currency rates; one for commercially driven transactions and one for financially driven transactions. Build up expertise and a track record before making your currency fully convertible.

This means that potentially the Emerging Markets are in a position to create new opportunities and fill up the gap left behind by the introduction of the Euro. However, this needs a different approach to the markets than at present and has to be based upon a stable political and economic environment. Politicians, regulators and market participants should operate together to develop these markets, we all have the same goal.

At the ACI- The Financial Markets Association, we can and will play an important role in terms of education and defining best market practices for everybody.