Running the World"s Markets (ebook)

Argumento de Running the World"s Markets (ebook)

"Overall, this excellent work is a must-read for anybody involved in the regulation of market infrastructure institutions. It provides valuable lessons and cautionary tales for how to create a sturdy and stable financial market infrastructure."--Journal of International Banking Law and Regulation

"How should the infrastructure underpinning today's volatile, rapidly evolving, and complex markets be run? Ruben Lee's extensive knowledge, superlative analysis, and practical guidance help answer this fundamental question."--Donald F. Donahue, chairman and CEO, The Depository Trust & Clearing Corporation

"Ruben Lee has used his deep understanding of the markets to produce a comprehensive analysis of governance issues. A must for every policymaker's bookshelf."--Ravi Narain, CEO, National Stock Exchange of India

"Ruben Lee has written the essential guide to the ownership, structure, and governance of the exchanges, clearing houses, and depositories constituting the essential infrastructure of financial markets throughout the world. Nobody understands or explains these vital, complex, and constantly evolving institutions better than Lee."--Henry B. Hansmann, Yale Law School

"Market infrastructures are based on an unusually strong combination of contradictory forces. In this complicated setting, Ruben Lee's book constitutes a major contribution, laying bare these complexities and offering perspectives for their efficient organization."--Eddy Wymeersch, chairman, Committee of European Securities Regulators

"While one may disagree with some of its conclusions, this book is an important contribution to the debate about the role and function of regulation and regulators, and the governance of financial market infrastructure."--Jane Diplock AO, chairman, New Zealand Securities Commission and chairperson, Executive Committee, International Organization of Securities Commissions

"Lee offers important policy analysis for governing the institutions that provide the basic infrastructure of the world's financial markets. He looks at crucial but underanalyzed organizations that sustain the critical trading, clearing, and settlement platforms for the world's massive cash and derivative markets. The well-developed policy proposals contained here would, if implemented, make the financial markets significantly safer and more efficient."--Jonathan Macey, Yale Law School0Foreword and Acknowledgments xi
List of Acronyms xiii
Introduction 1
Nature of Governance 1
Concerns 2
Issues 3
Approach 3
Structure 4

Part One: Background Information and Analysis 7

Chapter One: Definitions 9
Infrastructure 9
Exchanges, Central Counterparties, and Central Securities Depositories 21
Conclusions 36

Chapter Two: Market Power 40
Preliminary Comments 40
Exchanges 45
CCPs 61
CSDs 71
Conclusions 81

Part Two: Survey Evidence 83

Chapter Three: The Allocation of Regulatory Powers over Securities Markets 85
World Federation of Exchanges 85
International Council of Securities Associations 88
Infrastructure Institutions in Major Markets 90
Conclusions 114

Chapter Four: Regulation and Governance of MarketInfrastructure Institutions: Global Perspective 117
The Financial Sector Assessment Program and Securities Markets Assessments 117
Observations 125
Conclusions 141

Chapter Five: Governance of Market Infrastructure Institutions: A Snapshot 145
Data 146
Analysis 151
Conclusions 164

Part Three: Case Studies 167

Chapter Six: Exchanges 169
Deutsche Börse / London Stock Exchange: Proposed iX Merger 2000 170
Euronext: Purchase of LIFFE 2001 177
Hong Kong Exchanges and Clearing: The Penny Stocks Incident 2002 180
NASDAQ: Attempted Takeover of London Stock Exchange 2006-8 189
New York Stock Exchange: Resignation of Chairman-CEO 2003 194
Osaka Securities Exchange: "Murakami Fund" Purchase of Shares 2005 198

Chapter Seven: CCPs and CSDs 201
Canadian Depository for Securities: Ownership, Usage, and Board Representation to 2008 201
Depository Trust & Clearing Corporation: EuroCCP 2000-2002 207
Deutsche Börse: Creation of Clearstream International 1999-2002 213
Euroclear: Creation, Ownership, and Board Structure up to 2006 217
LCH.Clearnet: Creation and Difficulties 2003-6 231

Part Four: Policy Analysis and Recommendations 245

Chapter Eight: What Is the Most Efficient Governance Structure? 247
Ownership and Mandate: Archetypal Models and Primary Goals 248
Ownership Model and Mandate: Critical Factors Affecting Efficiency 253
The Board: Role and Composition 276
Concluding Discussion and General Propositions 293

Chapter Nine: Who Should Regulate What? 301
Complexity 301
Factors and Constraints Affecting Relative Merits of Different Allocation Structures 307
Concluding Discussion and General Propositions 334

Chapter Ten: How Should Market Infrastructure Institution Governance Be Regulated? 339
Preliminary Comments 339
Investor Protection 342
Efficiency, Fairness, and Transparency 348
Systemic Risk Reduction 353
Concluding Discussion and General Propositions 357

Authorities 363
Cases and Decisions 365
Notes 367
References 395
List of Contributors 433
Index 437