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Some of the major institutional investors scour the world for stock bargains. One who has been roundly rewarded at that game is Peter Lynch, the aggressive manager of the wildly successful Fidelity Magellan Fund (assets: $7 billion), which last year notched up 43.1% growth. Lynch is widely known for his willingness to pick a foreign concern as an investment as readily as a domestic firm. He casts afield to West Germany, the Netherlands and even Finland for his choices.
To meet growing demand, electronic trading networks are reaching out internationally, in the first stages of what NASDAQ President Gordon Macklin calls a "global market for equities." That integration took a significant step forward in London last week. With much popping of champagne corks, exploding of fireworks and high jinks on the trading floor, the British financial community hailed the advent of Big Bang: the Oct. 27 abolition of a regime of fixed brokerage fees in existence since 1908, and their replacement by competitive commissions.
The British reform, which brought the London exchange into line with practices on Wall Street, will boost Britain's competitive position as an international equities-trading center. Big Bang also inaugurated an era of enhanced computer trading on the London Stock Exchange, where a new $21 million automatic stock-quotation system, known as SEAQ, went into operation. The Big Bang welcome was moderately dampened when trading on the London exchange was delayed for 65 minutes at the start. The reason: a computerized stock-quotation system crashed.
Another door has opened cautiously on the Tokyo Stock Exchange, where 1,492 Japanese equities worth an estimated $1.8 trillion are listed. Last January six foreign firms, including the U.S. investment houses of Merrill Lynch, Morgan Stanley and Goldman, Sachs, were invited to join the 83-member exchange. Now at the end of the trading day in Tokyo, giant Merrill Lynch routinely passes on an electronic "book" (accumulated position) of some 430 internationally traded stocks to its offices in London and then New York for further action.
But as the range and scope of electronic trading increases, so may the regulatory headaches. Says Gary Lynch, the Securities and Exchange Commission's enforcement chief: "The internationalization of the markets is a huge potential problem unless regulators are prepared to cooperate." Since May, the SEC and U.S. commodity-exchange regulators have signed memorandums of understanding with Japan and Britain, agreeing to share information in trading-fraud cases.
The question of what to do about the alleged excesses of the domestic stock market is considerably thornier. Many people argue that there is little or nothing to be done at all. That feeling is particularly strong within the Reagan Administration, which has a fervent belief in what the President calls the "magic of the marketplace."