Dorn, Nicholas --- "Policy Stances in Financial Market Regulation: Market Rapture, Club Rules or Democracy?" [2011] ELECD 1044; in Alexander, Kern; Moloney, Niamh (eds), "Law Reform and Financial Markets" (Edward Elgar Publishing, 2011)

Book Title: Law Reform and Financial Markets

Editor(s): Alexander, Kern; Moloney, Niamh

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9780857936622

Section: Chapter 2

Section Title: Policy Stances in Financial Market Regulation: Market Rapture, Club Rules or Democracy?

Author(s): Dorn, Nicholas

Number of pages: 34

Extract:

2. Policy stances in financial market
regulation: Market rapture, club
rules or democracy?1
Nicholas Dorn

INTRODUCTION

This chapter argues in favour of democratisation of financial market
regulation ­ a topic resisted by many market participants and by some in
regulation, yet one that is being explored by policymakers in the US and the
EU, notably the UK.2 Two reasons are advanced. First, active democratic
oversight of financial market regulation is merited on grounds of principle.
Second, accountability to national and regional parliaments would result
in regulatory diversity, resulting in more robust market systems at global
level. The current de facto `independence' of financial market regulators
allows them to network globally yet privately, to negotiate on the basis of
market demands (each national regulator championing its home industry)
and to converge their rules accordingly ­ producing common blind spots,
systemic vulnerabilities and heightened potential for global crisis.
Clearly this analysis cuts against the grain of much regulatory thinking.
Before the systemic crisis manifested itself, regulatory thinking was explic-
itly favourable to regulatory convergence and it remains so (or perhaps is


1 The author thanks interdisciplinary masters students on the 2008/9 course

on global governance at Erasmus University Rotterdam and senior colleagues
in the law faculty; Michael Levi at Cardiff University and Tom Vander Beken at
Gent University, both of whom commentated on an earlier version; participants in
at the 23­25 June 2009 W G Hart Legal Workshop on Law Reform and Financial
Markets, held at IALS, London; Simone White, ...