EU Capital Requirements and the Level Playing Field

96-111

Posted: 27 Jun 1998

See all articles by Simon Wolfe

Simon Wolfe

University of Southampton - School of Management; University of Southampton - Southampton Business School

Richard Dale

University of Southampton

Date Written: February 1996

Abstract

This paper examines the likely impact of Capital Adequacy Directive (CAD) on European Securities markets, focusing in particular on the competitive consequences for institutions engaged in the trading of equity securities. The major conclusions are: first, the CAD cannot by itself ensure a level playing field given the importance of other sources of competitive distortions; second, perverse incentives exist for securities firms due to the failure of the CAD to take proper account of portfolio diversifications; third, major competitive distortions will arise due to differences in national implementation of the CAD; and finally, the EU securities industry will experience competitive distortions as a result of differences between the CAD and other regulatory regimes.

JEL Classification: G21

Suggested Citation

Wolfe, Simon and Dale, Richard, EU Capital Requirements and the Level Playing Field (February 1996). 96-111. Available at SSRN: https://ssrn.com/abstract=7406

Simon Wolfe

University of Southampton - School of Management ( email )

Highfield
Southampton S017 1BJ, Hampshire SO17 1BJ
United Kingdom

University of Southampton - Southampton Business School ( email )

Southampton, SO17 1BJ
United Kingdom

Richard Dale (Contact Author)

University of Southampton ( email )

Highfield
Southampton SP10 1BJ, Hampshire SO17 1BJ
United Kingdom
(+44) 01703 593966 (Phone)
(+44) 01703 593844 (Fax)

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