Synopses & Reviews
"How should the infrastructure underpinning today's volatile, rapidly evolving, and complex markets be run? Ruben Lee's extensive knowledge, superlative analysis, and practical guidance help answer this fundamental question."
--Donald F. Donahue, chairman and CEO, The Depository Trust and Clearing Corporation"Ruben Lee has used his deep understanding of the markets to produce a comprehensive analysis of governance issues. A must for every policymaker's bookshelf."--Ravi Narain, CEO, National Stock Exchange of India
"Ruben Lee has written the essential guide to the ownership, structure, and governance of the exchanges, clearing houses, and depositories constituting the essential infrastructure of financial markets throughout the world. Nobody understands or explains these vital, complex, and constantly evolving institutions better than Lee."--Henry B. Hansmann, Yale Law School
"Market infrastructures are based on an unusually strong combination of contradictory forces. In this complicated setting, Ruben Lee's book constitutes a major contribution, laying bare these complexities and offering perspectives for their efficient organization."--Eddy Wymeersch, chairman, Committee of European Securities Regulators
"While one may disagree with some of its conclusions, this book is an important contribution to the debate about the role and function of regulation and regulators, and the governance of financial market infrastructure."--Jane Diplock AO, chairman, New Zealand Securities Commission and chairperson, Executive Committee, International Organization of Securities Commissions
"Lee offers important policy analysis for governing the institutions that provide the basic infrastructure of the world's financial markets. He looks at crucial but underanalyzed organizations that sustain the critical trading, clearing, and settlement platforms for the world's massive cash and derivative markets. The well-developed policy proposals contained here would, if implemented, make the financial markets significantly safer and more efficient."--Jonathan Macey, Yale Law School
Review
The book is recommended as a valuable tool for both private practice lawyers and in-house lawyers in banks and companies who need to deal with (cross-border) acquisition finance transactions. Roman Jordans
Review
"Overall, this excellent work is a must-read for anybody involved in the regulation of market infrastructure institutions. It provides valuable lessons and cautionary tales for how to create a sturdy and stable financial market infrastructure."--Journal of International Banking Law and Regulation
Review
Overall, this excellent work is a must-read for anybody involved in the regulation of market infrastructure institutions. It provides valuable lessons and cautionary tales for how to create a sturdy and stable financial market infrastructure. Journal of International Banking Law and Regulation
Synopsis
The efficiency, safety, and soundness of financial markets depend on the operation of core infrastructure--exchanges, central counter-parties, and central securities depositories. How these institutions are governed critically affects their performance. Yet, despite their importance, there is little certainty, still less a global consensus, about their governance.
Running the World's Markets examines how markets are, and should be, run.
Utilizing a wide variety of arguments and examples from throughout the world, Ruben Lee identifies and evaluates the similarities and differences between exchanges, central counter-parties, and central securities depositories. Drawing on knowledge and experience from various disciplines, including business, economics, finance, law, politics, and regulation, Lee employs a range of methodologies to tackle different goals. Conceptual analysis is used to examine theoretical issues, survey evidence to describe key aspects of how market infrastructure institutions are governed and regulated globally, and case studies to detail the particular situations and decisions at specific institutions. The combination of these approaches provides a unique and rich foundation for evaluating the complex issues raised.
Lee analyzes efficient forms of governance, how regulatory powers should be allocated, and whether regulatory intervention in governance is desirable. He presents guidelines for identifying the optimal governance model for any market infrastructure institution within the context of its specific environment.
Running the World's Markets provides a definitive and peerless reference for how to govern and regulate financial markets
Synopsis
The efficiency, safety, and soundness of financial markets depend on the operation of core infrastructure--exchanges, central counter-parties, and central securities depositories. How these institutions are governed critically affects their performance. Yet, despite their importance, there is little certainty, still less a global consensus, about their governance. Running the World's Markets examines how markets are, and should be, run.
Utilizing a wide variety of arguments and examples from throughout the world, Ruben Lee identifies and evaluates the similarities and differences between exchanges, central counter-parties, and central securities depositories. Drawing on knowledge and experience from various disciplines, including business, economics, finance, law, politics, and regulation, Lee employs a range of methodologies to tackle different goals. Conceptual analysis is used to examine theoretical issues, survey evidence to describe key aspects of how market infrastructure institutions are governed and regulated globally, and case studies to detail the particular situations and decisions at specific institutions. The combination of these approaches provides a unique and rich foundation for evaluating the complex issues raised.
Lee analyzes efficient forms of governance, how regulatory powers should be allocated, and whether regulatory intervention in governance is desirable. He presents guidelines for identifying the optimal governance model for any market infrastructure institution within the context of its specific environment.
Running the World's Markets provides a definitive and peerless reference for how to govern and regulate financial markets
Synopsis
"How should the infrastructure underpinning today's volatile, rapidly evolving, and complex markets be run? Ruben Lee's extensive knowledge, superlative analysis, and practical guidance help answer this fundamental question."--Donald F. Donahue, chairman and CEO, The Depository Trust and Clearing Corporation
"Ruben Lee has used his deep understanding of the markets to produce a comprehensive analysis of governance issues. A must for every policymaker's bookshelf."--Ravi Narain, CEO, National Stock Exchange of India
"Ruben Lee has written the essential guide to the ownership, structure, and governance of the exchanges, clearing houses, and depositories constituting the essential infrastructure of financial markets throughout the world. Nobody understands or explains these vital, complex, and constantly evolving institutions better than Lee."--Henry B. Hansmann, Yale Law School
"Market infrastructures are based on an unusually strong combination of contradictory forces. In this complicated setting, Ruben Lee's book constitutes a major contribution, laying bare these complexities and offering perspectives for their efficient organization."--Eddy Wymeersch, chairman, Committee of European Securities Regulators
"While one may disagree with some of its conclusions, this book is an important contribution to the debate about the role and function of regulation and regulators, and the governance of financial market infrastructure."--Jane Diplock AO, chairman, New Zealand Securities Commission and chairperson, Executive Committee, International Organization of Securities Commissions
"Lee offers important policy analysis for governing the institutions that provide the basic infrastructure of the world's financial markets. He looks at crucial but underanalyzed organizations that sustain the critical trading, clearing, and settlement platforms for the world's massive cash and derivative markets. The well-developed policy proposals contained here would, if implemented, make the financial markets significantly safer and more efficient."--Jonathan Macey, Yale Law School
Synopsis
The efficiency, safety, and soundness of financial markets depend on the operation of core infrastructure--exchanges, central counter-parties, and central securities depositories. How these institutions are governed critically affects their performance. Yet, despite their importance, there is little certainty, still less a global consensus, about their governance.
Running the World's Markets examines how markets are, and should be, run.
Utilizing a wide variety of arguments and examples from throughout the world, Ruben Lee identifies and evaluates the similarities and differences between exchanges, central counter-parties, and central securities depositories. Drawing on knowledge and experience from various disciplines, including business, economics, finance, law, politics, and regulation, Lee employs a range of methodologies to tackle different goals. Conceptual analysis is used to examine theoretical issues, survey evidence to describe key aspects of how market infrastructure institutions are governed and regulated globally, and case studies to detail the particular situations and decisions at specific institutions. The combination of these approaches provides a unique and rich foundation for evaluating the complex issues raised.
Lee analyzes efficient forms of governance, how regulatory powers should be allocated, and whether regulatory intervention in governance is desirable. He presents guidelines for identifying the optimal governance model for any market infrastructure institution within the context of its specific environment.
Running the World's Markets provides a definitive and peerless reference for how to govern and regulate financial markets
Synopsis
"How should the infrastructure underpinning today's volatile, rapidly evolving, and complex markets be run? Ruben Lee's extensive knowledge, superlative analysis, and practical guidance help answer this fundamental question."--Donald F. Donahue, chairman and CEO, The Depository Trust and Clearing Corporation
"Ruben Lee has used his deep understanding of the markets to produce a comprehensive analysis of governance issues. A must for every policymaker's bookshelf."--Ravi Narain, CEO, National Stock Exchange of India
"Ruben Lee has written the essential guide to the ownership, structure, and governance of the exchanges, clearing houses, and depositories constituting the essential infrastructure of financial markets throughout the world. Nobody understands or explains these vital, complex, and constantly evolving institutions better than Lee."--Henry B. Hansmann, Yale Law School
"Market infrastructures are based on an unusually strong combination of contradictory forces. In this complicated setting, Ruben Lee's book constitutes a major contribution, laying bare these complexities and offering perspectives for their efficient organization."--Eddy Wymeersch, chairman, Committee of European Securities Regulators
"While one may disagree with some of its conclusions, this book is an important contribution to the debate about the role and function of regulation and regulators, and the governance of financial market infrastructure."--Jane Diplock AO, chairman, New Zealand Securities Commission and chairperson, Executive Committee, International Organization of Securities Commissions
"Lee offers important policy analysis for governing the institutions that provide the basic infrastructure of the world's financial markets. He looks at crucial but underanalyzed organizations that sustain the critical trading, clearing, and settlement platforms for the world's massive cash and derivative markets. The well-developed policy proposals contained here would, if implemented, make the financial markets significantly safer and more efficient."--Jonathan Macey, Yale Law School
About the Author
Ruben Lee is CEO of Oxford Finance Group. He was a fellow of Nuffield College, University of Oxford, and worked for Salomon Brothers International. He is the author of "What is an Exchange?"
Table of Contents
Foreword and Acknowledgments xi
List of Acronyms xiii
Introduction 1
Nature of Governance 1
Concerns 2
Issues 3
Approach 3
Structure 4
Part One: Background Information and Analysis 7
Chapter One: Definitions 9
Infrastructure 9
Exchanges, Central Counterparties, and Central Securities Depositories 21
Conclusions 36
Chapter Two: Market Power 40
Preliminary Comments 40
Exchanges 45
CCPs 61
CSDs 71
Conclusions 81
Part Two: Survey Evidence 83
Chapter Three: The Allocation of Regulatory Powers over Securities Markets 85
World Federation of Exchanges 85
International Council of Securities Associations 88
Infrastructure Institutions in Major Markets 90
Conclusions 114
Chapter Four: Regulation and Governance of MarketInfrastructure Institutions: Global Perspective 117
The Financial Sector Assessment Program and Securities Markets Assessments 117
Observations 125
Conclusions 141
Chapter Five: Governance of Market Infrastructure Institutions: A Snapshot 145
Data 146
Analysis 151
Conclusions 164
Part Three: Case Studies 167
Chapter Six: Exchanges 169
Deutsche Börse / London Stock Exchange: Proposed iX Merger 2000 170
Euronext: Purchase of LIFFE 2001 177
Hong Kong Exchanges and Clearing: The Penny Stocks Incident 2002 180
NASDAQ: Attempted Takeover of London Stock Exchange 2006-8 189
New York Stock Exchange: Resignation of Chairman-CEO 2003 194
Osaka Securities Exchange: "Murakami Fund" Purchase of Shares 2005 198
Chapter Seven: CCPs and CSDs 201
Canadian Depository for Securities: Ownership, Usage, and Board Representation to 2008 201
Depository Trust and Clearing Corporation: EuroCCP 2000-2002 207
Deutsche Börse: Creation of Clearstream International 1999-2002 213
Euroclear: Creation, Ownership, and Board Structure up to 2006 217
LCH.Clearnet: Creation and Difficulties 2003-6 231
Part Four: Policy Analysis and Recommendations 245
Chapter Eight: What Is the Most Efficient Governance Structure? 247
Ownership and Mandate: Archetypal Models and Primary Goals 248
Ownership Model and Mandate: Critical Factors Affecting Efficiency 253
The Board: Role and Composition 276
Concluding Discussion and General Propositions 293
Chapter Nine: Who Should Regulate What? 301
Complexity 301
Factors and Constraints Affecting Relative Merits of Different Allocation Structures 307
Concluding Discussion and General Propositions 334
Chapter Ten: How Should Market Infrastructure Institution Governance Be Regulated? 339
Preliminary Comments 339
Investor Protection 342
Efficiency, Fairness, and Transparency 348
Systemic Risk Reduction 353
Concluding Discussion and General Propositions 357
Authorities 363
Cases and Decisions 365
Notes 367
References 395
List of Contributors 433
Index 437