Strengthening China's cross border securities regulatory regime through transgovernmental regulatory networks

: taking the IOSCO as core model

Abstract

The causes of the recent international financial crisis are still subject to debate and require further research, and the crisis has revealed important flaws in the international financial architecture. It highlights the need to strengthen cross-border regulations in the international financial markets. A consensus has been reached that global regulatory issues cannot be addressed by national states, working for the national interest, alone. Fair, efficient and transparent globalized capital markets should be subject to fair, effective and competent cross border regulatory arrangements. However, cross border securities transactions and market mutual access and state-centered regulation regimes coexist uncomfortably. Unitary domestic regulation is far from sufficient to prevent financial contagions such as cross-border market violations. Globalization makes it difficult to address global issues within the limits of domestic laws, and the increasingly globalized securities markets require domestic regulators to develop cooperative networks with foreign counterparts. To avoid regulatory arbitrage, traditional, nationalized regulatory regimes with differing regulatory philosophies can co-develop by understanding and supporting each other, by sharing information and by providing regulatory and enforcement assistance. This thesis reviews the current state of international securities regulatory cooperation and identifies some approximate regulatory channels created by interdependent international securities markets. Numerous bilateral and regional cooperation mechanisms have been established to make regulatory cooperation in securities and futures markets more effective. Unlike those of the World Trade Organization (WTO) or the International Monetary Fund (IMF), these structures of cooperation flow through informal networks. Within these informal international networks of cooperation, promises and agreements made are strictly in compliance with domestic laws. In other words, efforts to develop regulatory cooperative networks in an era of financial globalization remain under the constraint of domestic legislation. This research is aimed at understanding mechanisms for international cooperation among securities regulators in the world, especially focusing on information sharing and cross border enforcement assistance. It also explores the historical theory of transgovernmental regulatory networks, overviews international securities regulatory cooperation in the last two decades, analyses securities regulatory cooperation networks with the IOSCO as the core example, and summarizes China's feasibility as a signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information (MMOU). In the process, it discusses possible directions and practical suggestions to address domestic and international means to enhance cross border securities regulatory cooperation in China through the extensive and efficient implementation of IOSCO MMOU.

Date of Award	15 Jul 2014
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Guiguo WANG (Supervisor) & Peter MALANCZUK (Supervisor)