Why the Impact of Technology on Securities Demands Advanced Oversight

21 Sep

Professor Chris Brummer argues that disruptive innovation has affected financial markets the most, despite scholars and policymakers not having a uniform grasp of the observable fact, much less a consistent set of regulatory solutions. Partly, the challenge emanates from the numerous ways by which invention upends trade activities. Another problem is the common misconception that clearing procedures, broker-dealers, and other "watchmen" provide a solid foundation upon which securities regulation operates. As such, effective regulation is required to cope with the realities the twenty-first century technology presents capital markets.  

Now, securities regulation is under intense pressure, thanks to the unparalleled extent of technological innovations that keep upending the very basic market frameworks behind securities markets animation. Improvements in computer processing as well as information technology has seen major financial intermediaries, such as exchanges and investment banks relegated to the side with new market players taking charge. If the undesired outcome caused by intermittent reorganization of capital raising procedures is also factored in, it's clear how private stakeholders and venues boasting better technology are now hosting and mediating capital market liquidity, eroding the importance of public offerings.  

Such developments now call for painstaking examination in the wake of the global cash crunch, and the momentum taken by new market technologies and disruptions soars breathtakingly. More capital is being acquired via private placements than public offerings, thanks to the creation of new platforms to solve demand. For blue-chip companies' securities, these are easily traded off exchanges at the same volumes as on the companies themselves. Such disruptions keep accelerating with technological advancement, and collectively, they've left regulators without any effective response as they, too, attempt to determine their role in the new financial markets ecosystem. In response to these effects of technology, as prof brummer argues, securities authorities have chosen either not to interfere or adopted near "comical concessions," for example the realization of Twitter and approval of tweets by the agency as a way to reach out to investors.         

To create a theoretical framework for handling disruptive technology calls for flexibility of insights to enable the accommodation and scrutiny of distinct and dynamic market environments against growing sets of regulatory responsibilities and policy objectives. As such, there's the critical need to avoid traditional suppositions about how regulatory policy gets to function. Check this http://abovethelaw.com/tag/chris-brummer/ to know more!

For maximum effectiveness, securities regulation needs to be upgraded to address a computerized (and usually virtual) capital markets microstructure that's facing accelerating dynamics. The new securities regulation must account for the automated financial services, which have redefined market liquidity and changed its mode of operation. It's also important to address private markets that are building an ever-growing spectrum of options for security issuances as well as trading. Make sure to check out this website at https://en.wikipedia.org/wiki/Finance and learn more about finance.

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