GEI Projects

15. INTERNATIONAL REGULATORY INSTITUTIONS AND GLOBAL SECURITIES MARKETS

Principal Researcher

Professor GEOFFREY R D UNDERHILL
Department of Politics and International Studies
University of Warwick

Contact

Professor Geoffrey R D Underhill
Department of Politics and International Studies
University of Warwick
Coventry CV4 7AL

Tel: 01203 523110/523302
Fax: 01203 524221
Email: poraj@snow.csv.warwick.ac.uk

Duration of Research

June 1996 – May 1998

AIMS AND OBJECTIVES

The project will explore the relationship (or lack thereof) between structural change in global securities markets and emerging patterns of institutions established for their regulation and supervision.

In exploring the pattern of international regulatory institutions, the project will analyse the nature of political authority with respect to transnational markets and the patterns of cooperation and conflict over regulatory policies towards the markets.

These patterns of conflict and cooperation need to be understood in relation to the various interdependent levels of international regulatory and supervisory institutions with respect to securities markets: regulatory institutions co-exist at the national, regional (EU, NAFTA), and global (IOSCO/Basle Committee) levels of analysis.

The research will aim to understand the interplay between private interests in the markets and the public interest as represented by relevant regulatory institutions. In particular, the potential for regulatory capture of these institutions will be explored, particularly in areas such as the derivatives markets where access to information needed by regulatory authorities is largely controlled by market intermediaries.

The research aims to understand the implications of these developments for our theoretical and practical understanding of the relationship between politics and markets, and to develop conceptual and practical insights into the political economy of liberalization with respect to the domain of money and financial markets.

STUDY DESIGN

Two essential research tools will be employed, each mutually reinforcing: documentary research and elite interviews.

Documentary research: most important will be official papers on securities regulation and the consultative documents which emerge throughout the policy process. Of equal concern will be the position papers of private associations and other interested parties as they attempt to influence regulatory policy and patterns of regulatory cooperation. Lastly, the financial press, secondary sources, and statistical publications will be relied upon.

Elite interviews: these will emphasise equally the interviews with public agencies and interviews with private associations (domestic and international) involved in the regulatory process. Interviews will be employed to corroborate evidence gathered from documentary research, and to fill any gaps in the written record.

POLICY IMPLICATIONS

An analysis of the nature of the policy process will help responsible official agencies and governments to understand why regulatory cooperation has emerged on a piecemeal basis, across the political jurisdictions of states, between emerging regional arrangements, and across lines of functional responsibility in segments of the financial services industry.

The research will make possible a better understanding of the balance between the particularistic interests of private-market players and industry associations and the public interest concerns in regulatory and supervisory policy.

The research aims to assist regulators, supervisors, and the governments responsible in dealing with the pressures of regulatory arbitrage, which is driven by competitive concerns in the global state system and by the search by market players for transaction cost advantages.

The research aims to help provide an understanding of the relationship of changing power relations among states in the global system to tensions in the system of cooperative regulation and supervision.