Market Regulation: Origins and Cultural Perspectives

The regulation of derivative markets in the US focuses on protecting individual investors from fraud and criminal activity, assuring the integrity of markets and safeguarding the economy against systematic risk emanating from the financial sector. These three critical objectives are not embedded in one regulatory authority, but are instead distributed across several institutions with very different origins and priorities, based in no small way on the historical context that led to their creation. That is, to appreciate the sources of different regulatory philosophies among the major regulators of derivative markets in the US, one has to examine why each institution was brought into existence and how that shaped its specific regulatory style and priorities…