The Hardening of Soft Law in Securities Regulation
Brooklyn Journal of International Law, Vol. 34, 2009
70 Pages Posted: 1 Apr 2009 Last revised: 8 May 2009
Date Written: March 31, 2009
Securities law regulation frequently utilizes soft law, or non binding standards and principles of conduct. Often soft law standards have hardened into treaties, statutes or rules. As securities regulation becomes more international, this trend will continue. Numerous international bodies are involved in the development of securities standards and many of them operate by building consensus among experts in an informal setting. This Article discusses four examples of the use and hardening of soft law in the international realm: the establishment of international financial reporting standards; the development of MOUs; the negotiation of an anti-bribery treaty; and the regulation of credit rating agencies. Soft law norm development thus allows for speed, flexibility and expertise necessary to respond to fast breaking developments. Despite problems of authority, process, and legitimacy, the authors argue that soft law securities regulation is generally desirable internationally as it counteracts competitive races to the bottom, and makes regulatory cooperation more palatable.
Keywords: securities law, corporate, soft law, financial regulation, international
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