A National Pattern of Policy Transfer: The Regulation of Insider Trading in France

Abstract

The policy that prohibits insider trading in France offers an example of the various mechanisms through which a country's domestic policy conforms to a foreign model. It is argued that the securities industry is dominated by the US, thus offering a case in which the institutions of the leader country in the domain are spreading. France adopted a symbolic version of the US model at the end of the 1960s as a way of trying to bolster the Paris stock exchange. However, as a consequence of the Pechiney scandal, in the early 1990s the SEC urged the French government to strengthen its policy against insider trading in accordance with its own model. It was argued that international cooperation would be more effective between autonomous agencies than between judicial systems. Finally, a further step was taken in 2003 on foot of a European Union directive when a more powerful and autonomous agency was created, the Autorite des marches financiers. Here, it is argued that the French system of insider trading regulation has been shaped by the US model and by international factors. However, despite external pressure for convergence, the French model maintains its own distinctive features. This finding adds to our understanding of cross-national policy transfer.