Conduct And Market Regulator

Conduct and Market regulation has reasonable prospects of viable international regulation. In the early stages, regional regulation is probably most likely, rather than moving straight to a global regulator.  As with prudential regulation, numerous academic studies describes that each country benefits from sound market regulation, and from regulation according to a prominent international standard. Like prudential regulation, market regulation is subject to clear economies of scale and can be established on a user-pays model.  Conduct and Market regulation is also increasingly carried on by an independent regulator, rather than a ministerial government department.   Admittedly there would be some loss of sovereignty involved in delegating to an international regulator, but this should be partly ‘repaid’ by a greater ability to signal robust regulation.  Unfortunately, international standards are less developed in the area of market and conduct regulation. While the IOSCO principles are broad in scope, they are not detailed enough to readily allow for implementation by an international regulator.  Much detail is still left to national regulators at present.  International financial market regulation is most likely in one of two ways. One is fundraising, where disclosure requirements are somewhat more detailed at the IOSCO level, together with the IAS. The other is regional regulatory models, where small groups of countries with similar political and regulatory history band together to set up regional securities rules and a regional regulator.  The IOSCO, with its wide membership of national regulators, is well poised to transform itself to adopt such a role.”  However, IOSCO would need to change drastically before it could evolve into an international regulator. In the short to medium term, it is more likely that IOSCO will continue to coordinate international standards and cooperation, but that moves toward supranational market regulation will develop at a regional level. For example, CESR, the US/Canada and Australia/NZ systems could realistically evolve into regional supranational regulators in the future.