**4.10 Markets for government bonds**


As the intermediary, the financial services industry has both a difficulty and an opportunity because of the same combination of increased savings flows and new

technologies. The speed with which the European sector is consolidating shows that the transformation is already begun. However, because a merger takes time to complete, there may be a period before the new services are put out and advertised to the final client [51–53].

Other Stock Exchange operations could be eliminated, leaving only the certainty of settlement as the most important activity. Shorter settlement durations (eventually shifting to real-time) are lowering even that role as the scale of settlement risk grows. One strategy to change is the rise of clearing houses, such as for futures exchanges [33].

Trading functions must continue to be carried out by suitably funded and regulated exchanges, clearinghouses, and financial intermediaries as more exchanges become computerized and distant trading becomes available. This is critical for the financial markets' systemic stability. Allowing unregulated and undercapitalized software or technology firms to supply important procedures in electronic securities transactions (for example, trading software or electronic links) introduces new dangers [54].

By offering asset management services as an "institutional investor" or as a direct execution agent, the financial services industry is attempting to position itself as this intermediary. Nonetheless, as traditional Stock Exchanges compete with Over The Counter (OTC) traders and Alternative Trading Systems, the execution infrastructure is changing dramatically (ATS). Electronic Crossing Networks are becoming more common (ECNs) [36].
