60/YOUR MONEY OR YOUR LIFE!
THE MAIN PLAYERS ON FINANCIAL MARKETS
But who, after all, are the main players on financial markets?
The biggest hitters are a few dozen of the largely American and
British private pension funds, mutual funds and other types of
investment funds, the big insurance companies and the big multina
tional banks. These players are known as 'institutional investors'.
Throw in a few dozen big multinational industrial houses, and the list
is complete.
Indeed, the list is quite short.
A research group within the IMF carried out a confidential study
to determine who had been the main players in the attacks on the
European Monetary System in the summer of 1992. They found
them to be quite small in number - 30 to 50 banks and a handful of
security brokerages. These control the key currency markets. During
the 1992 crisis, 43 per cent of transactions in London and 40 per cent
of transactions in New York were carried out by the ten biggest banks
in these two markets. The findings of this IMF study were never
related at a press conference. Frangois Chesnais writes,
The Bank of France and the German Bundesbank closed ranks to
spend 300 billion dollars in defence of the European Monetary
System during the summer of 1992. But this sum was of little sig
nificance compared to the amounts that those determined to force
a change in exchange rates - and pocket major profits in the
process - were able to mobilise. (Chesnais, 1994)In addition to speculation on exchange markets, another type of
operation has emerged: derivatives (Benies, 1995). The spring 1995
Barings bankruptcy drew public attention to this type of operation.
Even if they are called 'investment products', they have nothing to do
with production. They are purely speculative in nature.
There has been a spectacular boom in derivative trading. In 19 8 6,
S500 billion were involved; the total was S5.345 billion in 1992.
Among the main players on financial markets are private pension
funds. Their financial assets were worth S4.570 billion in 1994. To
achieve the desired result against a strong currency, it is enough that
they devote 10 per cent of total assets in a concerted one-off
speculative operation.