UBC Theses and Dissertations
"No man is an island" : the globalization of securities regulation, the rise of the internet and the challenge to develop effective and acceptable corporate governance principles Wade, Shawn M.
We live in an increasingly global age, where our notions of community often encompass the world. This process has occurred in the past, but in its current guise it has impacted and changed the world like not other process. More and more of the rules governing us, in many areas of our lives, are vested in supranational bodies and in global institutions. Technological advances allow ideas, investors and business opportunities to cross borders, and evade nationally based regulators. The pace of technological change often outpaces developments in the law, and the willingness of national jurisdictions to cede sovereignty and authority over areas of their national life. On the other hand, the danger posed by ceding too much authority to distant and unaccountable global bodies, raises the specter of creating a democratic deficit, and undermining a local community's control over its own affairs. This is something which nation states and national regulators wish to avoid. The solution to this dilemma, is often to "think globally and act locally", however in the case of global securities markets, ones fuelled by the internet and an instantaneous transfer of funds, this solution, paradoxically, is sometimes most difficult to implement. Nations still retain control over their own national treasuries and currencies, so they also wish to control their national financial markets. This impedes the ability of trade and capital to flow to where it wishes to go, as governments and nations often have a vested interest in preserving he status quo. Globalization has been on the march for some time. However, the combination of liberalized trade laws, removal of restrictions on capital movement, the rise of low tax off-shore jurisdictions and the revolution in communications technology, have pushed this process forward at an alarming pace. The law is forced to play catch up, as it grapples with these new challenges, and also must work with the reticence of governments to change their laws and surrender sovereignty. The role played by NGO's and "the people" who often come together and protest groups, such as the W.T.O., is increasingly influencing national governments. In trying to create a system for conducting and regulating global securities trade, a balance must be struck between what these groups will accept, what is in the public good, what is good for the markets, and what the authorities can administer and control. The principles under which business operates also influences how effectively securities markets operate. I shall also examine some aspects of corporate governance to try to determine an optimal set of principles for business to employ in this new global market. There are many players in this process. In regards to the liberalization and reform of the rules for global trade generally, and the regulations for securities trading specifically, the W.T.O. and its "Top Down" approach to securities regulation, is one approach, while the regional trading blocks, and their "Side to Side" harmonization efforts, form another. The "Bottom Up" approach by the international financial services QUANGOS forms a third leg of the trade liberalization triangle. In creating a set of global regulations the question of who should administer them merits deep consideration. While the principles adopted to govern and administer the trade in securities may well be global, the administration of the rules on the ground must for the foreseeable future be left in the hands of local nationally based regulators. The criminal sanction of transgressors must also, be left in the hands of the nation state (due to the danger of extraterritoriality, and reasons of administrative practicality). A set of rules for the trade in securities on a global basis is necessary, as is a way of getting nations to both agree to them and implement them. Facing up to the challenges posed by technology and the innovations of cyber criminals complicates our investigation. The solution will be found through a building a consensus of the many parties to the debate over the globalization of securities regulation, and ensuring that the laws and regulations created can stand the test of time.
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