The equity and derivatives markets
From an international perspective, Sweden has a very well-developed securities market, which is central to economic development. Two central parts of the securities market are the equity market and the derivatives market The Swedish Securities Market continuously monitors and analyzes developments on these markets and how they function. In addition, the Swedish Securities Markets Association has several working groups with members who deal with various issues related to these markets.
The equity market
From both an investor and corporate perspective, Sweden has one of the most well-developed stock markets in Europe. The Swedish stock market is also one of the most developed in terms of market capitalization in relation to GDP.
Sweden has a strong tradition of investing in shares and almost 2 million Swedish private individuals own shares in Swedish companies. This means that almost every fifth person in Sweden has a direct ownership of shares, in addition to the ownership through investment in equity funds. The Swedish stock market is also attractive from an international perspective and just over 40 percent of ownership in Swedish shares comes from abroad.
Every year, many new companies enter the Swedish stock market by listing on the stock exchange. Many companies use share capital to develop, expand and sustain their operations. This is important for large, medium and small companies. The latter category of companies is often referred to as Small and Medium-sized Enterprises or “SMEs”. The Swedish stock market for SMEs is the largest in the EU.
The derivatives market
The derivatives market trades financial instruments that can be used to manage different types of risk. Companies, for example, often need to protect themselves against (hedge) different types of financial risk. They can do this by trading in derivative contracts that are specifically designed to manage such risks.
Depending on their needs, companies can trade derivatives linked to currencies, commodities, interest rates or equities. Examples of derivative contracts include options, futures and swaps.
There are also investors who use derivatives to speculate on certain types of market movements, such as a stock or a stock index.
The work of the association
The Swedish Securities Markets Associstions work with the equity and derivatives markets is divided into a number of different working groups with members depending on the issues being dealt with. The groups discuss, for example, developments in the market, the need for clarification and changes in applicable regulations, market structure issues and actions towards policy-makers in Sweden and the EU. The Swedish Securities Market also maintains a dialog with the marketplaces and various parts of the financial infrastructure. Examples of working groups are the Marketplace Group, the Market Data Group and the Derivatives Market Committee.