The Wider Context: The Future of Capital Markets Regulation in Developed Markets
Law in Transition, Forthcoming
14 Pages Posted: 20 Dec 2011 Last revised: 14 May 2012
Date Written: November 29, 2011
At a time of such great turbulence, looking to the future directions of capital markets and their regulation in developed economies is a particularly risky business. We are in the midst of a great sea change.
Nevertheless, there are several current, and readily observable, phenomena which are likely to shape capital markets regulation in the near future. First of all, the blurring of the distinctions between developed and developing markets themselves, as well as that between domestic and international markets, has put into question the adequacy of existing regulatory frameworks. Also, the transatlantic dialogue, London – New York, has given way to the rise of “multipolarity”; in an age of instantaneous transmission of information, capital and risk, competing centres of gravity have emerged. In addition, centuries-old market institutions are undergoing a period of dynamic change, producing the equivalent of regulatory jetlag. Among international actors, there are calls for what may be the somewhat indiscriminate widening of the “perimeter” of regulation; costs of compliance mount, regulatory uncertainty sets in. To the numerous, conflicting and perhaps unrealisable, goals associated with capital markets regulation has been added detection and prevention of systemic risk. The two great, albeit quite different, capital market regulatory models (those of the United States and the United Kingdom) have taken a beating; it ist an open question as to what will take their place. Finally, in face of the virtually insurmountable difficulties of actually creating a World Financial Regulator (to say nothing of its desirability), two organisations, one created in direct response to the Global Financial Crisis, and the other, decades-old, are filling the void.
None of these factors operates independently, of course; all interact, contributing to the potential uncertainty and complexity of outcomes.
Keywords: capital markets regulation, securities regulation, developed economies, perimeter of regulation, systemic risk, regulatory models, global financial crisis, stock exchanges
JEL Classification: G10, G15, G18, G20, G30, G38, K20, K22, N20
Suggested Citation: Suggested Citation