The Foundations and Future of Financial Regulation: Governance for Responsibility

Financial regulation has entered into a new era, as many foundational economic theories and policies supporting the existing infrastructure have been and are being questioned following the financial crisis. Goodhart et al's seminal monograph "Financial Regulation: Why, How and Where Now?" (Routledge:1998) took stock of the extent of financial innovation and the maturity of the financial services industry at that time, and mapped out a new regulatory roadmap. This book offers a timely exploration of the "Why, How and Where Now" of financial regulation in the aftermath of the crisis in order to map out the future trajectory of financial regulation in an age where financial stability is being emphasised as a key regulatory objective.

The book is split into four sections: the objectives and regulatory landscape of financial regulation; the regulatory regime for investor protection; the regulatory regime for financial institutional safety and soundness; and macro-prudential regulation. The discussion ranges from theoretical and policy perspectives to comprehensive and critical consideration of financial regulation in the specifics. The focus of the book is on the substantive regulation of the UK and the EU, as critical examination is made of the unravelling and the future of financial regulation with comparative insights offered where relevant especially from the US. Running throughout the book is consideration of the relationship between financial regulation, financial stability and the responsibility of various actors in governance.

This book offers an important contribution to continuing reflections on the role of financial regulation, market discipline and corporate responsibility in the financial sector, and upon the roles of regulatory authorities, markets and firms in ensuring the financial health and security of all in the future.

Part 1: The Objectives and Governance Landscape in Financial Regulation 1. Introduction 2. The Objectives of Financial Regulation 3. The Decentred Regulatory Space in Financial Sector Governance and the Essential Partnership of Public and Private-led Governance 4. The Governance Role of Auditors in Financial Regulation Part 2: Investor Protection in Financial Regulation 5. The Nature of Investor Protection 6. Regulatory Governance of Alternative Investment Fund Managers 7. Regulation of Credit Rating Agencies 8. Consumer Protection in the Retail Market Part 3: Regulating Financial Firms 9. Regulating the Soundness of Financial Intermediaries 10. From Financial Intermediaries to Masters of the Universe 11. Addressing the Consequences of Financial Empire Building and Systemic Risk Costs 12. Boosting Micro-prudential Regulation 13. The Meta-regulatory Nature of Risk Management and Corporate Governance Part 4: Macro-prudential Supervision for the Future 14. The Rise of Macro-prudential Supervision 15. Information Collection and Surveillance in Macro-prudential Supervision 16. The Regulatory Architecture for Macro-prudential Supervision in the UK and EU 17. The Pre-emptive Approach in Financial Regulation and the Accountability of Regulatory Authorities in the UK and EU 18. The International Framework for Financial Regulation 19. Conclusion