Market Integrity and Regulatory Systemic Risk: Insight from the Market Oriented Blockholder Model

16 Pages Posted: 18 Jun 2010

See all articles by Aviv Pichhadze

Aviv Pichhadze

affiliation not provided to SSRN

Date Written: June 15, 2010

Abstract

I adopt a novel approach vis-à-vis systemic risk in the capital markets and securities regulation in the US in light of the recent economic crisis. I show that regulators can introduce into the regulatory framework “regulatory systemic risk” – long-term imbalances introduced into the regulatory framework via regulatory initiatives premised on a distorted understanding of market realities – thereby reducing investor protection. This results mainly from failure to (i) take note of the general market trend towards the market oriented blockholder model and (ii) update the regulatory framework accordingly. The extent of the regulatory systemic risk is also discussed. From theoretical, practical and policy perspectives the analysis illustrates the need for regulators to be cognizant of long-term trends in the capital markets in the process of addressing lessons from the recent economic crisis in order to foster improved market efficiency, enhanced shareholder protection, and remove imbalances embedded in the current regulatory framework.

Keywords: Capital Markets, Corporate Governance, Institutional Investors, Ownership, Regulation, Risk

JEL Classification: K22, G23, G32, G34, G38

Suggested Citation

Pichhadze, Aviv, Market Integrity and Regulatory Systemic Risk: Insight from the Market Oriented Blockholder Model (June 15, 2010). Osgoode CLPE Research Paper No. 16/2010. Available at SSRN: https://ssrn.com/abstract=1625416 or http://dx.doi.org/10.2139/ssrn.1625416

Aviv Pichhadze (Contact Author)

affiliation not provided to SSRN

Register to save articles to
your library

Register

Paper statistics

Downloads
349
rank
79,915
Abstract Views
765
PlumX Metrics