Download this Paper Open PDF in Browser

Rethinking the Future of Self-Regulation in the Financial Industry

42 Pages Posted: 21 Oct 2010  

Saule T. Omarova

Cornell University - Law School

Date Written: October 20, 2010


This article seeks to broaden the scope of the ongoing debate on financial regulation reform by making a case for reinventing industry self-regulation on a fundamentally new normative basis. The article argues that, in the face of the increasing complexity and globalization of financial markets and activities, it is critically important to seriously consider the potential role of industry self-regulation as one of the key mechanisms of controlling and minimizing systemic risk – a task that is not adequately performed by the existing financial industry self-regulatory organizations (SROs). The article suggests a new normative approach to self-regulation in the financial services sector – “embedded self-regulation” – which focuses explicitly on prevention of systemic failure and is firmly embedded in the broader public interests and policy goals. This new self-regulatory model will seek to redefine the broader social role of the private financial sector and to impose the primary responsibility for safeguarding financial stability directly on the financial services industry whose activities threaten such stability.

Suggested Citation

Omarova, Saule T., Rethinking the Future of Self-Regulation in the Financial Industry (October 20, 2010). Brooklyn Journal of International Law, Vol. 35, No. 3, p. 665, 2010; UNC Legal Studies Research Paper No. 1695031. Available at SSRN:

Saule T. Omarova (Contact Author)

Cornell University - Law School ( email )

Myron Taylor Hall
Cornell University
Ithaca, NY 14853-4901
United States

Paper statistics

Abstract Views