Regulating Financial Servicesand Markets in the

Twenty First Century

Edited byEILlS FERRAN

andCHARLES A E GOODHART

-•HART-PUBLISHING

O X F O R D - PORTLAND O R E G O N2001

Contents

List of Contributors ix

GENERAL OVERVIEW

A. Regulating Financial Services and Markets in the Twenty FirstCentury: An Overview 1Eilis Ferran and Charles A.E. Goodhart

2. Reforming Financial Régulation: Progress and Priorities 17Howard Davies

OBJECTIVES AND PRINCIPLES3. Regulatory Principles and the Financial Services and Markets

Act 2000 25Colin Mayer

4. Examining the Objectives of Financial Régulation—Will the NewRégime Succeed? A Practitioner's View 37Atnelia C. Fawcett

s5. Incentive v. Rule-Based Financial Régulation: A Rôle for MarketDiscipline 59Rahul Dhumale

REGULATION OF SENIOR MANAGEMENT6. Directors' Fiduciary Duties and the Approved Persons Régime 75

Colin Bantford

7. Fiduciary Duties, Régulation of Companies and Régulation ofIndividuals 89Sir Adam Ridley

DISCIPLINE, ENFORCEMENT AND HUMAN RIGHTS8. Regulatory Discipline and the European Convention on Human

Rights—A Reality Check 95Daniel F. Waters and Martyn Hopper

9. Holding the Balance—Effective Enforcement, Procédural Fairnessand Human Rights 115Thomas A.G. Beazley

viii Contents

ACCOUNT ABILITY

10. Regulating the Regulator—A Lawyer's Perspective onAccountability and Control 127Alan Page

11. Regulating the Regulator—An Economist's Perspective onAccountability and Control 151Charles A.E. Goodhart

YL. Public Accountability in the Financial Sector 165Rosa M. Lastra and Fïeba Shams

EUROPEAN REGULATION

13. Regulating European Markets: The Harmonisation of SecuritiesRégulation in Europe in the New Trading Environment 189Eddy Wymeersch

14. The Case for a European Securities Commission „ 211Gilles Thieffry

INTERNATIONAL REGULATION

15. New Issues in International Financial Régulation 235John Eatwell

16. The Financial Stability Forum (FSF):Just Another Acronym? 255Andrew G. Haldane

17. The Need for Efficient International Financial Régulation andthe Rôle of a Global Supervisor 273Kern Alexander

ROLE OF RATING AGENCIES

y&. The Rôle of Rating Agencies in Global Market Régulation 297Steven L. Schwarcz

\$. The Rôle of Crédit Rating Agencies in the Establishment of CapitalStandards for Financial Institutions in a Global Economy 311Howell E. Jackson

TECHNOLOGICAL CHANGE AND REGULATION

20. The Challenge of Technology—Régulation of Electronic FinancialMarkets 323

Part I : Securities and Derivatives Markets 323Gay WisbeyPart II : Nasdaq 330Mary L. SchapiroPart III: London Stock Exchange 335David Shrimpton

Index 341