Which Way for Market Institutions? The Fundamental Question of Self-Regulation
Melbourne Law School; European Corporate Governance Institute (ECGI); Center for Transnational Legal Studies (London)
Pamela S. Hughes
Blake, Cassels & Graydon LLP
Berkeley Business Law Journal, Forthcoming
CLEA 2008 Meetings Paper
University of Melbourne Legal Studies Research Paper No. 221
It is a fundamental question. How should financial market institutions be regulated? Is self-regulation alive and well, at least in some parts of the world, for some market functions? Or, despite a last gasp here and there, is self-regulation shuffling towards extinction? In particular, the wave of demutualizations and consolidations of exchanges has prompted questions as to traditional roles, governance models and the nature of regulation of exchanges. Demutualization of exchanges has been a catalyst for these debates, but the debates are not new. Although numerous studies have discussed the advantages and disadvantages of a self-regulatory structure for exchanges and other market institutions, few have considered the interaction of factors that have determined the traditional allocations of regulatory powers: market history, business culture, legal system, the concept of public interest, the corporate form, the political system, forces of internationalization. How have these factors affected the allocation of regulatory power? Will the self-regulatory model of market institution, where it has been dominant, be pushed to the margins by the interplay of these various factor, as in the UK? Do unitary regulators oust self-regulatory principles? Is self-regulation in the US merely a façade? Are small and emerging markets adopting outdated self-regulatory models at the behest of the international financial institutions? Do self-regulatory organizations have a new role to play as liaison between national and supranational regulators? It may be too soon to definitively answer the questions posed by this paper, but for the moment, self regulation is here to stay; it just might not be staying where it used to.
Number of Pages in PDF File: 24
Keywords: self-regulation, stock exchanges, self-regulatory organizations, internationalization of markets, legal systems
JEL Classification: F30, G15, G18, K22Accepted Paper Series
Date posted: May 20, 2008
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