Module 4 Final Project Milestone 3

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May 21, 2024

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Module 4 Final Project Milestone 3 FIN 335 Financial Markets SNHU 24EW4 Frank Warnock 30 March 2024 III. Oversight and Governance . A. U.S. Exchanges. Birkenstock Holding (BIRK) has chosen to list on the NYSE. NYSE has its own rules and regulations that must be met to list on their exchange. According to the NYSE website, they are regulated and oversight provided by the SEC (NYSE, 2024). Depending on the specific rules and regulations that govern the particular exchange being targeted for the initial public offering, that may be advantages and disadvantages between different exchanges. The main selling point that the NYSE has going for it is that they are considered to be the gold standard and most widely utilized global exchange. With the long history of BIRK, going with the NYSE was a wise move. The U.S. markets are regulated by the SEC (securities Exchange Commission). They enforce the rules with the threat of fines or deregulation which would disallow that company to be allowed to participate with U.S. based exchanges (SEC.gov, 2020). The SEC relies on self auditing and submitting required financial filings to provide public facing transparency. This ensures public confidences.

Companies might weigh the consequences of noncompliance between different exchanges before making the decision on to which exchange to list onto. For example, BIRK is a Londan based company but chose to list on the U.S. based NYSE that has to follow U.S. laws and regulations which differ from the United Kingdom. For BIRK, the advantage to listing on the NYSE outweighs the regulatory requirements and associated overhead. B. International Exchanges. BIRK shows an interesting case study when it comes to determining which exchange is most advantageous. Being a London based company, the obvious choice would be to list on the London Stock Exchange. To find information regarding the rules, regulations and oversight bodies for the London Stock Exchange, companies can go to www.londonstockexchange.com and can refence the rulebook (current rule book listed in the references section). The LSE is regulated by the FCA (Financial Conduct Authority), based in the UK that is charged with regulating financial firms and providing oversight with the goal of ensuring public trust within the English community. (https://www.fca.org.uk/about/what-we-do/the-fca) C. Multiple Markets. A company can list in multiple exchanges simultaneously which in known at dual listing (Mishkin, 2023). The pros included increased visibility in the market, ability to effectively trade for more hours in the day due to different time zones of the exchanges, diversifies risk due to market fluctuations for political reasons and gives the company access to more capital. The cons include added complexity having to deal with multiple regulations and

governing bodies, investors may be confused as to which is the best exchange to invest into the company, fluctuations between differing currencies and each market comes with its own set of risks inherent in that particular market. D. Interest. Interest rates in the U.S. are determined by the Federal Open Market Committee which consist of the 7 members of the Federal Reserve and 5 Federal Reserve Central bank presidents. They meet 8 times a year and update interest rates and monetary policies (FOMC, nd). Non-U.S. markets have diverse mechanisms for determining interest rates. Each country’s central bank, economic conditions, and regulatory environment play a role. Currency stability and exchange rates also affect interest rates. The U.S. government typically adjusts the federal funds rate to impact short-term borrowing costs. Lowering rates encourages borrowing and spending, stimulating economic activity. However, prolonged low rates can consolidate funds into narrow asset classes which can stagnate the economy. Governments can provide bailouts to crumbling sectors that are deemed essential and too critical to fail. References Regulatory actions . SEC Emblem. (2020, March 3). https://www.sec.gov/page/regulation Documents and publications . Documents and publications - London Stock Exchange. (n.d.). https://docs.londonstockexchange.com/sites/default/files/documents/publications.htm

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Mishkin, F. S., & Eakins, S. (2023). Financial Markets and Institutions (10th ed.). Pearson Education (US). https://mbsdirect.vitalsource.com/books/9780138043483 Federal Open Market Committee . The Fed - Federal Open Market Committee. (n.d.). https://www.federalreserve.gov/monetarypolicy/fomc.htm