Transnational Securities Regulation: How it Works, Who Shapes it

Description

The book provides an analysis of the emergence, evolution, and transformation of transnational securities regulation and of the influences from and the interactions between global regulatory powers in the field. Combining insights from law and political science, the work employs a two-tier complementary "on-the-books" and "in-action” approach. The more classical "on-the-books" approach draws on scholarship in United States and European Union securities regulation; transnational regulation and global administrative law; regime complexity; global governance studies; and the regulatory production of the International Organisation of Securities Commissions (IOSCO). The law in-action approach leverages the author’s experience as Compliance senior professional in a multinational financial institution as well as research interviews with senior IOSCO staff. The author’s findings enable the reader to develop an original understanding of IOSCO, its standards, and its unique place in the transnational regulatory arena. They also challenge the doxa that the US are the only driving regulatory power in the securities area when in fact, other regulatory powers are emerging – for the time being, the EU. The balance has shifted and regulatory compromises are achieved at different points in the rule making process. Foreword Acknowledgements Contents Abbreviations Chapter 1: Introduction 1.1 Research Questions 1.2 Scope and Definitions 1.2.1 Securities Regulation in the United States 1.2.2 Securities Regulation in the European Union 1.2.3 Securities Regulation 1.2.4 Transnational Law and Regulation 1.2.4.1 The Case of the European Union 1.2.5 Transnational Securities Regulation 1.3 Structure 1.4 Methodology References Part I: Transnational Securities Regulation: How It Works Chapter 2: IOSCO: Evolution, Nature, and Governance 2.1 Origin and Evolution of the Global Standard-Setter for Securities Regulation: IOSCO 2.2 The Particularly Unorthodox Legal Nature of IOSCO 2.3 Goals 2.4 Powers 2.5 Membership: Public Regulators and Private Actors 2.6 Regulatory Devices 2.7 Internal Bodies: Their Evolution and Meaning 2.7.1 Presidents Committee 2.7.2 Executive Committee and Technical Committee 2.7.3 The Committee for Emerging Markets 2.7.4 Regional Committees 2.7.5 The Committee of Self-Regulatory Organizations/Affiliate Members Consultative Committee 2.7.6 The 2011 Reform and the Establishment of the IOSCO Board 2.7.7 Permanent Committees 2.7.8 Temporary Task Forces 2.7.9 General Secretariat 2.7.10 The Asia Pacific Hub 2.8 Funding Mechanism 2.9 Internal Sanction Systems 2.10 A Transnational and Transgovernmental Network 2.11 Conclusion: An Internally Minilateral Private Law Club of Public Law Experts References Chapter 3: IOSCO in the International Financial Architecture 3.1 The Group of Twenty 3.2 The Financial Stability Board 3.3 The Basel Committee on Banking Supervision 3.4 The International Association of Insurance Supervisors 3.5 The Joint Forum 3.6 The Committee on Payments and Market Infrastructures 3.7 The International Monetary Fund and the World Bank 3.8 Self-Regulatory Organizations and Other Market Participants 3.9 IOSCO and the Accounting and Audit Oversight 3.9.1 The Monitoring Group 3.9.2 The Monitoring Board 3.10 IOSCO´s Interactions with Other Global Institutions 3.11 Conclusion: IOSCO´s Interactions in a Complex Architecture References Chapter 4: Standard-Making, Accountability, and Legitimacy 4.1 Standard-Making 4.1.1 The Method of Consensus 4.1.2 Pre-2011 Reform 4.1.3 The 2011 Reform and Standard-Making 4.1.4 Post-2011 Reform: Presidents Committee 4.1.5 Post-2011 Reform: IOSCO Board 4.1.6 Transparency and Rights of Participation in IOSCO: The Involvement of Private Actors 4.2 IOSCO´s Accountability and Legitimacy 4.2.1 Circle of Accountabilities 4.2.2 Expertise-Based Legitimacy 4.3 Conclusion: Achieving Consensus in a Club of Experts References Chapter 5: Combined Techniques for the Implementation of Securities Standards 5.1 Mechanisms Used to Monitor the Implementation of IOSCO Standards 5.2 Internal Peer Reviews 5.2.1 Assessment Committee 5.2.1.1 ITF Sub-Committee 5.2.2 Methodology for Assessing Implementation of the IOSCO Principles 5.2.3 Country Reviews 5.2.4 Thematic Reviews 5.2.5 Reviews on Specific Addressees 5.2.6 International Standards Implementation Monitoring program 5.3 External Reviews: FSAP, ROSCs, FSB Peer-Reviews 5.3.1 Financial Sector Assessment Program 5.3.2 Reports on the Observance of Standards and Codes 5.3.3 Peer Reviews of the Financial Stability Board 5.3.4 How Jurisdictions Score 5.4 Peer Assistance: Regulatory Capacity Building 5.4.1 The Secretariat´s Role in Regulatory Capacity Building 5.4.1.1 Technical Assistance Programs 5.4.1.2 Education and Training Initiatives 5.4.1.3 Capacity Building Online Toolkit 5.4.1.4 Self-Assessment 5.4.1.5 IOSCO/PIFS-Harvard Law School & Global Certificate Program for Regulators of Securities Markets 5.4.1.6 The Initiatives of the Asia Pacific Hub 5.4.1.7 Governance and Budgetary Efforts for Regulatory Capacity Building Initiatives 5.4.2 IOSCO´s Regulatory Capacity Building Programs: Collective Learning or Expertise-Driven Training? 5.5 Conclusion: A Combination of Institutionalized Peer Pressure and Peer Assistance References Chapter 6: A Mechanism for the Coordination of Cross-Border Enforcement 6.1 Memoranda of Understanding (MoUs) 6.2 SEC Traditional Dynamism Through Bilateral MoUs 6.3 Intra-European Multilateral Cooperation: The 1999 CESR MMoU 6.4 The Road to the IOSCO Memoranda of Understanding 6.5 IOSCO Multilateral Memorandum of Understanding (MMoU) 6.5.1 Content of the MMoU 6.5.2 Application and Commitment to Become a Signatory to the MMOU 6.5.3 Ongoing Monitoring of Compliance with the MMoU 6.5.4 Slow Adhesion to the MMoU 6.5.5 Use of the MMoU 6.6 IOSCO Enhanced Multilateral Memorandum of Understanding (EMMoU) 6.7 Cooperation on Supervision 6.8 Conclusion: A Club-Like Multilateral Mechanism for Cross-Border Enforcement References Part II: Transnational Securities Regulation: Who Shapes It Chapter 7: The Involvement of Regulatory Powers in IOSCO 7.1 The Chairpersonship of IOSCO´s Governing Bodies 7.2 Participation in Task Forces 7.3 The US and IOSCO 7.3.1 Key Characteristics of the SEC 7.3.1.1 The SEC´s Enforcement Activities 7.3.2 The Traditional Leading Role of the SEC 7.3.3 A More Recent Involvement of the CFTC 7.4 The EU and IOSCO 7.4.1 The Road That Led to ESMA 7.4.2 Key Characteristics of ESMA 7.4.2.1 ESMA´s Powers 7.4.3 ESMA´s Emerging Role in IOSCO 7.5 Conclusion: The Emergence of a De Facto Internal Bipolarity Within IOSCO References Chapter 8: Horizontal Standards: Harmonizing Principles and Conflicts of Securities Regulation 8.1 Objectives and Principles of Securities Regulation 8.1.1 The Principles and Their Roots 8.1.1.1 Principles Relating to the Regulator 8.1.1.2 Principles for Self-Regulation 8.1.1.3 Principles for the Enforcement of Securities Regulation 8.1.1.4 Principles for Cooperation in Regulation 8.1.1.5 Principles for Issuers 8.1.1.6 Principles for Auditors, Credit Rating Agencies, and Other Information Service Providers 8.1.1.7 Principles for Collective Investment Schemes 8.1.1.8 Principles for Market Intermediaries 8.1.1.9 Principles for Secondary and Other Markets 8.1.1.10 Principles Relating to Clearing and Settlement 8.2 Fragmented Markets and Conflicts of Securities Regulation 8.2.1 Post-crisis Regulatory Reforms, Market Fragmentations, and Domestic Regulatory Approaches 8.2.2 2015 Report on Cross-Border Regulation 8.2.3 2019 Report on Market Fragmentation & Cross-Border Regulation 8.2.4 2020 Report on Good Practices on Processes for Deference 8.3 Conclusion: From Broad Principles to Conflicts of Securities Regulation References Chapter 9: Vertical Standards Addressed to Public Authorities 9.1 Insider Trading 9.1.1 The US and the Origins of Insider Trading 9.1.2 Insider Trading in Europe 9.1.3 IOSCO and Insider Trading 9.2 Retail Investor Protection 9.2.1 Retail Investor Protection in the US 9.2.1.1 The Disclosure Paradigm 9.2.1.2 Categorization of Clients 9.2.1.3 Broker-Dealers: SRO Suitability and SEC Regulation Best Interest 9.2.1.4 Fiduciary Duty for Investment Advisors 9.2.2 Retail Investor Protection in the EU 9.2.2.1 Information Disclosure 9.2.2.2 Categorization of Clients 9.2.2.3 Public Law Conduct-of-Business Rules: Suitability and Appropriateness Tests 9.2.2.4 Product Governance 9.2.3 IOSCO and Retail Investor Protection 9.2.3.1 Early Standards: Information Disclosure and Fight Against Fraud 9.2.3.2 Between the 1998 Principles and the Post-crisis Reforms 9.2.3.3 Investor Protection in IOSCO After the Post-crisis Reforms 9.2.4 Conclusion: Best Practices as Standards for Peers References Chapter 10: Vertical Standards Addressed to Private Parties 10.1 Credit Rating Agencies 10.1.1 Credit Rating Agencies in the US 10.1.2 Credit Rating Agencies in the EU 10.1.3 Credit Rating Agencies and IOSCO 10.2 Financial Benchmarks and Oil Price Reporting Agencies 10.2.1 The 2016 EU Financial Benchmark Regulation-FBMR 10.2.2 The US Approach to Financial Benchmarks (and Its Clash with the Extraterritorial Effect of the EU FBMR) 10.2.3 IOSCO Standards on Financial Benchmarks 10.2.4 Oil Price Reporting Agencies (PRAs) 10.3 Conclusion: Global Standards with a `Supervisory Spirit´ References Chapter 11: Vertical Standards Set in Concert with Other Institutions 11.1 Early Global Standards on Derivatives 11.2 How the 2008 Crisis Triggered a Wave of Global Standards on Derivatives 11.3 Four Sets of Post-Crisis Standards Around Derivative Financial Instruments and Market Infrastructures 11.3.1 Mandatory Trading of Derivatives 11.3.2 Mandatory Clearing of Derivatives Through Central Counterparties 11.3.2.1 Principles for Mandatory Clearing Through Clearing Houses 11.3.2.2 Stability of Clearing Houses 11.3.2.3 Resolution and Recovery of Clearing Houses 11.3.3 Transaction Reporting 11.3.4 Requirements for Uncleared Derivatives 11.4 Post-crisis Reforms on Derivatives in the EU and the US: Divergence and Compromise 11.5 Conclusion: Multiple Global Standard-Setters, Domestic Divergences, and Bilateral Negotiations References Part III: Conclusions Chapter 12: Perspectives Around Transnational Securities Regulation 12.1 TSR as the Regulatory Product of a Private Club of Public Experts 12.2 TSR as a Playground for Global Regulatory Powers 12.3 The Way Forward References