With many markets including the US markets at an all time high, it’s easy to forget about 2008.
As many know, in 2008, markets were performing well and global economies were booming,
until one day Lehman Brothers fell, the financial system froze, and the world economy almost
collapsed. The root cause wasn’t just reckless lending and lack of transparency, but rather the
financial sector’s failure to keep up with innovation.
Let’s fast forward to today where global markets are again at an all time high, and everything
appears to be wonderful. We must now ask ourselves whether the underlying causes that almost
brought global markets to their knees, just 9 years ago, are in fact a thing of the past, or if banks
today are becoming bigger and more opaque than ever before and is trading and reporting still
lacking the necessary transparency. As Arthur Levitt, the former chairman of the SEC noted
to Forbes Magazine just a few years ago, none of the post-2008 remedies have “significantly
diminished the likelihood of financial crises”.
On top of the lack of transparency and seeming disregard for investors, a whole ecosystem of
banks, advisors, markets and record keepers are extracting enormous fees from both investors
and companies. On top of the inefficiencies created by high fees and low liquidity, existing trading
platforms lack transparency, third party verification and often suffer from conflicts of interest. In
short, little has changed since 2008.