Markets In Action

Looking Back at a Banner Year for Markets

In 2014, the U.S. economy showed sure signs of coming back to life. And we can all agree that it’s about time.

Reports of an improving employment picture for American workers, and improved estimates for economic growth, suggest the economy may have at last turned the corner after a long and challenging stretch.

There’s still a long way to go, but there’s reason to be encouraged about the prospects for next year. The Securities Industry and Financial Markets Association’s (SIFMA) Economic Advisory Roundtable forecasts that the U.S. economy will post a 2.3 percent growth rate for 2014, and should hit 3.0 percent in 2015. That suggests a reassuring trajectory for a healing economy.

One vital contributor to that growing sense of optimism is the nation’s financial markets.

The U.S. economy is a resilient system, and the financial industry and capital markets play a critical role in the health of that system. In 2014, U.S. capital markets provided approximately 75 percent of financing for businesses, serving as the marketplace for matching buyers and sellers and making a positive contribution to the growth of the economy. Americans depend on capital markets to build their businesses, invest in their futures and follow their dreams.

The fact is that the United States has the deepest, most liquid capital markets in the world. That’s a competitive advantage that gives Americans an edge when it comes to economic growth, job creation and long-term innovation.

SIFMA, as the leading trade association advocating for the financial industry (including banks, broker-dealers and asset managers), represents firms from the largest players on Wall Street to small offices in rural communities. These companies are engaged in communities across the country to raise capital for businesses, promote job creation and lead economic growth.

Here are a few industry highlights from this past year:

  • Strong Muni Bond Performance. The capital markets ended the year on a high note for municipal bonds, with muni issuers raising $332.1 billion to finance important community infrastructure projects like schools, airports, roads and bridges, hospitals, and more. A SIFMA survey found that total muni issuance for next year is projected to grow to $357.5 billion.
  • Boom in IPOs. It was a great year for initial public offerings, with 300 U.S. initial public offerings in 2014 raising over $94 billion in new capital. That investment will go toward growing companies, creating value for investors, creating jobs and driving innovation. It’s one of the best economic stimulus programs, and it doesn’t cost taxpayers a dime. And it’s not just the big players who are benefiting from the increase in IPO activity—small and mid-sized businesses also saw robust activity.
  • Making Markets Work Through Smarter Regulation. For SIFMA, 2014 also brought continued focus on key policy issues that are important to our members and their clients. We support the sensible implementation of the Dodd-Frank financial regulations, and we’ll continue to push for corrections to the law to ensure that it is implemented without needless costs, for the protection of all investors.
  • Preventing Cyber Attacks: In 2014, scarcely a week went by without news of a data breach at a private sector company, government agency or university. The increased level of risk of cyber attacks against the financial service industry has made mitigating the risks of such attacks one of SIFMA’s top priorities. We provided a set of actions that regulators can take if they plan to develop guidance, have assembled actionable guidance for our small and medium sized members, and we are leading the way in educating the business community about their responsibilities to protect their customers’ data. In 2015, we’ll continue to urge Congress to pass needed cyber security legislation that provides liability protection for information sharing.
  • Launch of Project Invested: Many investors admit that they don’t always understand how markets work; meanwhile, ideologues and the media all too often misrepresent the valuable role that the financial industry and the markets play in our society. SIFMA launched Project Invested in late 2014 as a way to help Americans better understand what financial markets contribute to our economy, nurture the spirit of entrepreneurship and serve as an engine of prosperity. That’s an important story to tell—keep an eye on Project Invested in 2015 as we continue to make the case for capital markets.

This summary only scratches the surface. For a fuller accounting of SIFMA’s activities and achievements, please take a look at our 2014 “Year in Review” report.

The last year was an incredibly fruitful period for SIFMA and for the financial industry as a whole, with significant accomplishments in making the markets more efficient and transparent for all investors. We plan to build upon that record of accomplishment in the year to come, with even greater focus on addressing issues like market structure, cyber security and protecting seniors from financial fraud. Stay tuned.