Retail Securities Regulation in the Aftermath of the Bubble
Retail Securities Regulation in the Aftermath of the Bubble
This chapter discusses regulation of the retail securities and investments industry, written for and from the perspective of an industrial organization economist. It describes the economic size and scope of this industry, and reviews the sources of market failure that create an economic rationale for regulation, focusing on information imperfections that cause agency conflicts, and potential limits on investor processing, monitoring and oversight. After reviewing the laws and regulatory institutions that comprise the core of modern securities regulation, the chapter examines four regulatory issues with parallels in other industries. First is the question of price regulation versus disclosure of investment management fees, an ongoing debate particularly for the mutual fund sector. Next is the role of antitrust policy and agency regulation in disciplining firm behaviour, especially when regulatory capture may be a concern. Third is the interplay between firm boundaries and conflicts of interest, which were scrutinized in the creation and repeal of the Glass-Steagall Act. Fourth is the effects of competition when quality is not observed, and the potential role for minimum quality standards and regulatory oversight in this setting. The conclusion highlights the recurring role that the market and regulatory failures it describes play in financial market failures.
Keywords: Retail securities and investments, Market failure, Securities regulation, Sarbanes-Oxley, Economic regulation, Asymmetric information, Conflicts of interest, Antitrust policy, Deregulation
Chicago Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.
Please, subscribe or login to access full text content.
If you think you should have access to this title, please contact your librarian.
To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.
