How Disruptive Innovation Necessitates Changes to Securities Regulation
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. The various channels by means of which innovation flips market practices over are part of the problem. Making matters worse, there's a popular understanding that stable gatekeepers, for example clearing systems and broker-dealers form the backdrop for the operation of securities regulation. Therefore, in twenty-first century securities markets, regulations require upgrading to be able to match the impact of invention.
Today, securities regulation continues to experience more profound obstacles, as unprecedented scope of technological advancements continue to upset the market microstructure helping drive capital markets. Advanced computer resources and information technology has helped push to the sidelines important financial go-betweens, including investment banks and exchanges, paving the way for new market participants. Better equipped private entities and sites are now providing brokerage and facilitation for capital market liquidity, with public offerings playing an insignificant role, which is easy to explain against the backdrop of inconsistent reforms to capital raising regulation.
It has become important to closely scrutinize such developments, against the backdrop of the global financial crisis, and as the rate of innovation and disruption in markets gain tremendous speed. Today, the money raised in private venues surpasses public offerings courtesy of the fresh tools developed to match demand. Concerning high-quality stocks, they're easily being traded via exchanges as much as through the firms themselves. These disturbances continue to soar with technological innovation, and they combine to render regulators clueless regarding what must be done as they, also, try to assert their authority in the new capital markets environment. chris brummer asserts that securities policymakers have responded to the impacts of innovation by either adopting a "hands-off" approach or agreeing to "comical" compromises, for instance the use of Twitter and acceptance of tweets as a means with which to communicate with 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. In turn, it becomes vital to abandon customary conjecture regarding the way to operationalize regulatory framework. For more facts about finance, visit this website at http://www.huffingtonpost.com/topic/personal-finance.
To optimize the influence of securities regulation, improvements are required to match a computerized (and typically digital) securities market microclimate undergoing change at rapid rates. The new securities regulation must account for the automated financial services, which have redefined market liquidity and changed its mode of operation. Private markets behind the development of a continuously-surging array of choices to facilitate security offerings and exchanges should also never be left out. Check this https://twitter.com/chrisbrummerdr to know more!