The Architecture of Securities Market Supervision Before and after the Crisis
24 Pages Posted: 23 Jul 2012
Date Written: July 1, 2012
Which is the current state of the securities market supervision architectures? The recent financial Crisis has forcefully demonstrated that the financial services markets are deeply integrated, suggesting a corresponding integrated supervisory approach. The fact that market integration calls for supervisory integration was evident also before the Crisis, particularly in the EU setting (Hertig and Lee 2003, Jovanovic 2006, Avgouleas 2007).
The three core goals of securities supervision and regulation are: the protection of investors; ensuring efficiency and transparency in the markets; and the reduction of systemic risk (IOSCO 1998). The effectiveness in pursuing the three goals relies on the capacity of collecting and producing information. In fact securities supervisors have progressively moved away from merit based regimes to disclose based regime (Carvajal and Elliot 2007): the supervisor’s role is to insure that markets are given fully, timely and accurate information.
In the last three decades the information gathering need takes place against the backdrop of fundamental changes in financial markets. The financial industry changed its conventional face, with a blurring of the traditional boundaries between banking, securities and insurance. In blurred markets the production and distribution of information for public goals can be implemented in two ways: coordination policy among supervisors and institutional integration of the securities supervision in the overall supervisory architecture.
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