Why Securities Regulation Requires Upgrade to Match Disruptive Technology

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Professor Chris Brummer argues that disruptive innovation has affected financial markets the most, despite scholars and policymakers not having a uniform grasp of the observable fact, much less a consistent set of regulatory solutions. One of the obstacles pertains to the diverse conduits through which new technology upsets market practices. Making matters worse, there’s a popular understanding that stable gatekeepers, for example clearing systems and broker-dealers form the backdrop for the operation of securities regulation. As such, effective regulation is required to cope with the realities the twenty-first century technology presents capital markets.

In this century, securities regulation faces more challenges than ever before, with new technology overwhelmingly altering the little market fundamentals that manipulate capital markets. Improvements in computer processing as well as information technology has seen major financial intermediaries, such as exchanges and investment banks relegated to the side with new market players taking charge. When you also consider the negative impact of sporadic improvements to the capital raising process, you understand why private players and places with increased sophistication are playing host and intermediary to capital market liquidity, reducing the significance of public offerings.

It has become important to closely scrutinize such developments, against the backdrop of the global financial crisis, and as the rate of innovation and disruption in markets gain tremendous speed. Today, the money raised in private venues surpasses public offerings courtesy of the fresh tools developed to match demand. For blue-chip companies’ securities, these are easily traded off exchanges at the same volumes as on the companies themselves. Such disruptions keep accelerating with technological advancement, and collectively, they’ve left regulators without any effective response as they, too, attempt to determine their role in the new financial markets ecosystem. In response to these effects of technology, as chris brummer argues, securities authorities have chosen either not to interfere or adopted near “comical concessions,” for example the realization of Twitter and approval of tweets by the agency as a way to reach out to investors.

Coming up with an abstract outline for countering technological disturbances requires flexible analytics to provide for and assess various and unique market ecosystems while considering policymaking goals and the mandate of regulation. In turn, it becomes vital to abandon customary conjecture regarding the way to operationalize regulatory framework. Learn more about finance at http://www.ehow.com/personal-finance/.

To optimize the influence of securities regulation, improvements are required to match a computerized (and typically digital) securities market microclimate undergoing change at rapid rates. The advanced securities policy should accommodate the automated financial markets that have given a new meaning and function to market liquidity. Equally essential, private marketplaces that are creating a consistently-expanding range of solutions catering for security offerings and trading require accommodation. Know about professor chris brummer here!

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