Book contents
- Frontmatter
- Contents
- Preface and acknowledgments
- Table of cases
- Table of treaties and legislation
- List of abbreviations
- 1 The retail investor and the EC
- 2 Designing a retail investor protection regime
- 3 Product regulation
- 4 Investment advice and product distribution
- 5 Disclosure
- 6 The trading process
- 7 Education and governance
- 8 Supervision, enforcement and redress
- Index
- References
2 - Designing a retail investor protection regime
Published online by Cambridge University Press: 26 February 2010
Book contents
- Frontmatter
- Contents
- Preface and acknowledgments
- Table of cases
- Table of treaties and legislation
- List of abbreviations
- 1 The retail investor and the EC
- 2 Designing a retail investor protection regime
- 3 Product regulation
- 4 Investment advice and product distribution
- 5 Disclosure
- 6 The trading process
- 7 Education and governance
- 8 Supervision, enforcement and redress
- Index
- References
Summary
Why intervene in the retail markets? Encouraging the empowered investor, shielding the irrational investor or supporting the trusting investor?
Characterizing investor protection
The EC investor protection regime is ultimately a creature of political compromise and is closely tied to market integration priorities. But it also forms an extensive regulatory regime which demands challenge and contextualization. This chapter uses the EC regime and aspects of UK implementation, in particular, ‘in action’ to examine the nature of retail investor protection regulation. Chapter 1 considered the ‘who’ of EC investor protection; this chapter considers the ‘why’ (section I), ‘why not’ (or the risks of intervention) (section II) and the ‘how’ (section III).
‘Investor protection’ has considerable intuitive appeal and dominates as a regulatory objective internationally. But it remains a controversial justification for intervention. Sharp distinctions arise between characterizations of investor protection as, for example, a threat to entrepreneurialism and efficient capital-raising, as an expression of social virtues and as a moral imperative. The retail investor has been cast as a central figure in contemporary capitalism, forming part of a wider cultural legacy which dates to nineteenth-century globalization. But the retail investor can also be regarded as a disruptive force.
Investor protection has traditionally been concerned with the defensive protection of the vulnerable investor against unscrupulous market participants. Under neo-classical economics regulatory analysis, however, protection is necessary only where market failures, primarily related to information asymmetries, arise.
- Type
- Chapter
- Information
- How to Protect InvestorsLessons from the EC and the UK, pp. 45 - 133Publisher: Cambridge University PressPrint publication year: 2010
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