Examining the Main Street Benefits of our Modern Financial Markets

Wednesday, March 10, 2010 - 7:00pm

March 2010

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Executive Summary

America's vibrant capital markets are the global gold standard, fueling the financial needs of business from the smallest single-person startup to our largest public companies. They enable the dreams of American families and help make the American economy the envy of the world. In this report, we show how Main Street businesses and workers benefit from our nation's well-regulated, efficient, transparent, and modern capital markets. We also demonstrate that seemingly small changes such as a financial transactions tax can cause considerable damage far fromWall Street, harming both investors and American businesses and impeding job recovery and growth.

Over the past twenty years or so, technology and competition have dramatically reduced the cost of investing. They have made our markets fairer than ever before, giving average investors access to the best possible price when they buy and sell. This liquidity and accessibility benefits companies large and small. Stock prices are higher, enabling more investment and job creation. Mid-cap and small-cap companies have a less costly path to the public markets, and venture capitalists are more likely to provide funding as a result.

The United States currently has highly liquid and highly automated capital markets. In the wake of the recent financial crisis, some have questioned whether this increased liquidity and automation in our capital markets benefits average Americans. They argue that we should turn back the clock by imposing taxes or installing other barriers to financial transactions that would sharply reduce liquidity, returning our markets to the trading inefficiencies of the 1990s or 1980s.