Stock Exchange Mobility, Unilateral Recognition, and the Privatization of Securities Regulation

Abstract

This Article identifies a new type of dynamics affecting today's international securities markets, which it dubs exchange mobility. Competition in these markets has now reached such levels that even the largest stock exchanges in the world are exposed to threats on their very existence. In their struggle to survive stock exchanges are starting to transform into transnational business firms with shareholders, issuers, and traders of diverse nationalities. As they become wholesale agents of stocks and trades, stock exchanges also acquire unprecedented bargaining power vis-a-vis national securities regulators. Some of the latter respond in ways that constitute a new regulatory paradigm, which this Article dubs unilateral recognition. These developments may undermine the nature of securities regulation as a nationally specific body of law and also imply that regulatory reform proposals based on issuer choice need to be adjusted to the new market reality. However, the traditional characterization of securities regulation as public law is likely to remain intact, inter alia, because securities regulators are likely to retain their beneficial role in tomorrow's markets.