The emergence of transnational hybrid governance: how private risks trigger public intervention

Karremans, Johannes; Héritier, Adrienne

doi:10.4337/9781839101120.00015

Cited by 3 publications

(11 citation statements)

References 11 publications

(20 reference statements)

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“…“In this transformation, OTC derivatives became increasingly complex instruments involving multiple payment exchanges, with credit exposures being increasingly associated with time-varying derivatives” (Schinasi et al ., 2000, pp. 3, 16 cited in Karremans and Hé ritier, 2020, p. 140). In their complexity, they became difficult to understand and predict.…”

Section: Illustrative Empirical Casesmentioning

confidence: 99%

“…OTC derivatives deriving their value from other assets were largely unregulated until 2000 (Awrey, 2010, p. 162). The underlying contracts represent the right or obligation to buy or sell certain security, commodity, currency or another financial instrument at some future point in time at a defined settlement rate (Karremans and Héritier, 2020, p. 139; Biggins and Scott, 2012, p. 312). They are not traded on exchanges, but “over-the-counter”, directly between buyers and sellers, hence are not centrally cleared in CCPs (Karremans and Héritier, 2020, p. 139).…”

Section: Illustrative Empirical Casesmentioning

confidence: 99%

“…The underlying contracts represent the right or obligation to buy or sell certain security, commodity, currency or another financial instrument at some future point in time at a defined settlement rate (Karremans and Héritier, 2020, p. 139; Biggins and Scott, 2012, p. 312). They are not traded on exchanges, but “over-the-counter”, directly between buyers and sellers, hence are not centrally cleared in CCPs (Karremans and Héritier, 2020, p. 139). As bespoke agreements between buyers and sellers, they are considered useful investment and risk strategies, but – not being cleared – are also considered to be riskier at a micro and macro level (Biggins and Scott, 2012, p. 316).…”

Section: Illustrative Empirical Casesmentioning

confidence: 99%

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Financial markets regulation: political accountability challenged

Héritier

2023

ITPD

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PurposeThis paper aims to conceptualize and empirically illustrate the challenges that financial market regulation presents to politicians and the organization tasked with specifying regulations and supervising their implementation in the interest of users and consumers of financial instruments. It analyses the problem from the viewpoint of the governor's dilemma and the control/competence conflict, the linked problem of the rent-seeking of agents/intermediators and consumers of financial instruments. Political accountability problems are enhanced by the materiality of the technologies used, i.e. algo trading.Design/methodology/approachThe paper theoretically conceptualizes and empirically illustrates the argument.FindingsThe paper finds that regulators of digitalized financial markets are faced with considerable problems and depend on private agents when regulating financial transactions. However, the new technological instruments also offer new possibilities for securing compliance.Research limitations/implicationsFurther research should focus more in-depth on the cooperation between public and private actors in the specification and implementation of regulatory details. It should further investigate the conditions which allow regulators to use RegTech in the surveillance of financial firms.Practical implicationsSince financial market transactions are opaque for most users, the creation of more transparency is crucial to hold regulators accountable in their activity of surveillance of financial firms. New algorithm-based technologies may lend important support in doing so.Originality/valueBy linking the different analytical perspectives, i.e. the governor's dilemma vis-à-vis the intermediator or agent and the possible rent-seeking of intermediators, under the condition of a highly developed technology of financial transactions as well as the market structure, the paper offers new insights into the limits as well as new opportunities of regulating financial markets allowing for political accountability of regulators and financial firms.

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Section: Illustrative Empirical Casesmentioning

confidence: 99%

Section: Illustrative Empirical Casesmentioning

confidence: 99%

Section: Illustrative Empirical Casesmentioning

confidence: 99%

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Financial markets regulation: political accountability challenged

Héritier

2023

ITPD

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“…In the context of transnational financial regulation there are many non-state or private actors engaged in self-regulation or co-regulation with state actors (Karremans and Héritier 2020) which in their transnational regulatory activities escape the vertical control of state actors when holding them accountable (Black and Rouch 2008). This raises complex problems like how to use accountability mechanisms in such a way as to challenge the effects of regulation.…”

Section: Procedural Accountabilitymentioning

confidence: 99%

“…More precisely, the recent regulatory reforms of European financial market regulation have resulted in different patterns of centralised, de-centralised and even fragmented rulemaking, with regulatory standards mostly set at the European level and effective market supervision carried out at the member-state level (Héritier and Schoeller 2020). In parallel, as always in financial regulation, through self-regulation, co-regulation with regulators and lobbying by interest groups, private actors have provided substantial inputs to the content of European regulations (Helleiner et al 2018;Karremans and Héritier 2020;Smolenska et al 2020).…”

Section: Introductionmentioning

confidence: 99%

Introduction: Regulating finance in Europe: policy effects and political accountability

Héritier¹,

Karremans²

2021

Regulating Finance in Europe

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Proportionality in a European Capital Markets Code

Chiu

2024

Regulating EU Capital Markets Union

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This chapter discusses what principles should govern the proportionality of a Capital Markets Code, ie the scope of inclusion of legal issues as well as the extent of their legalization. We argue that the instrumental principle, drawn from the CMU’s intended policy outcomes, should form the underpinning principle for proportionality. In this manner, the Code would cater for issues crucial to incentivizing issuers to participate in the supply side and investors to deepen the demand side of European capital markets. The chapter also supports the Capital Markets Code to adopt an approach where various levels of legalization or hardening of legal principles can be provided, while recognizing a variety of sources of securities market governance.

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The emergence of transnational hybrid governance: how private risks trigger public intervention

Cited by 3 publications

References 11 publications

Financial markets regulation: political accountability challenged

Financial markets regulation: political accountability challenged

Introduction: Regulating finance in Europe: policy effects and political accountability

Proportionality in a European Capital Markets Code

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