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Centre for Financial & Management Studies (CeFiMS) - University of London

Individual Professional Courses – IPC    

Regulation of International Capital Markets [FFL109]

Introduction

This course has been specially designed for postgraduates studying finance and financial law and the course and does not assume that you have previously studied financial regulation. It is designed to contribute to your enhanced understanding of the ways in which governments and public authorities intervene in the operation of financial markets.

The course focusses on the principles of regulation of international financial markets and examines the public regulation of financial markets - that is, the relationship between central government, independent government agencies or indeed international orgnasiations on the one hand, and financial markets or market participants on the other.

The course is premised upon the notion that the students of finance and financial law ought to develop a sound understanding of the various choices available to policy makers and national supervisory authorities in relation to the design and structure of national regulatory frameworks. The course will provide a critical view of current regulatory developments with the aim to identify the most appropriate regulatory policies towards increasingly complex financial phenomena and markets.

Aims & Objectives

When you have completed your study of this course, you will be able to:

  • Outline and discuss the main reasons for government intervention in financial markets

  • Analyse the inherent weakness of the financial system and explain the role of law in correcting those deficiencies

  • Explain the reasons for and techniques of banking regulation and supervision

  • Examine and discuss the importance of capital regulation for the stability of the banking system

  • Outline and discuss the methods and instruments of securities regulation in a range of issues, including Initial Public Offerings, financial intermediaries, securities trading, fraudulent practices and takeovers

  • Critically assess the regulatory components of the global financial system

  • Analyse the legal components of current work towards a stronger global financial system following a recent sequence of devastating crises in Asia, Latin America and elsewhere.

Resources

Students receive a looseleaf binder containing eight ‘course units’; these texts are carefully structured to provide the main teaching and are equivalent to traditional course lectures, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the further assigned readings. Two assignments (to be marked by your CeFiMS tutors), and a specimen examination paper are also included within the student pack, along with the following:

Readings:

There is no single textbook that accompanies this course. Instead, a compilation of readings: recently published articles or seminal writings, is provided.

Course Timetable:

This shows the linkage between the various components of the course and indicates the schedule for reading the texts, submitting assignments, etc.

Course Content

Unit 1: Introduction to Financial Regulation

This unit outlines and discusses the reasons that have prompted governments around the world to intervene in financial markets by way of legally binding regulation, supervision and enforcement. The unit briefly introduces the fundamental concepts of regulation and supervision, the institutions involved and the main instruments and forms of regulatory enforcement. Finally, it aims to outline and discuss the concept of financial regulation, its objectives, its economic rationale and its basic methods and forms.

Unit 2: Central Banking and Banking Regulation

This unit discusses the main types and instruments of financial regulation. The unit aims to provide a comparative perspective of the range of structures and organisation models of financial regulation in different countries around the world. The nature and the principal types of risk that may undermine the soundness and the stability of the banking system is also discussed. The Unit explores the question of why banking systems must be regulated, and presents the role and function of the central bank with particular reference to the regulation and supervision of the financial system. Finally, you will study an overview of the institutional structure and processes of banking regulation and supervision.

Unit 3: Introduction to International Capital Markets

This unit introduces and provides an outline of the various types of financial assets and obligations. The unit will attempt to describe and discuss the nature and basic functions of primary and secondary capital markets. In studying it, you will examine the trend of increasing internationalisation and globalisation of capital markets, identifying its core components and study its implications. You will also be introduced to the notions of the international debt and Eurobond markets, and the international equity market.

Unit 4: Regulation of Primary Securities Markets

This unit introduces and outlines the core principles of regulation of primary securities markets. In doing so, the unit will describe and discuss the framework of regulation of primary markets in the United States of America. You will also study the efficient capital market hypothesis (ECMH) and its implications for the underlying assumptions of securities regulation. Finally, you will be introduced to the basic techniques of distribution of securities to the public and the role of investment bankers and other investment professionals.

Unit 5: International Regulation of Securities Firms

This unit introduces the core principles of regulation of securities firms, investment banks and other intermediaries in primary and secondary securities markets. It aims to describe and discuss the framework of regulation of brokers and dealers in the United States of America, and to outline the law of investor protection and discuss the principle of regulation of securities firms in the United Kingdom. Finally, you will study the basic elements and policies of regulation of securities firms and investment companies in the European Union.

Unit 6: International Regulation of Secondary Securities Markets

The core principles of regulation of stock exchanges, inter-dealer trading networks and other types of markets for trading in securities are introduced in this unit. You will learn about the main types of secondary securities markets in the United States and Europe, and you will study the law of insider trading and market abuse and learn the principles of regulation of orderly and efficient secondary markets. Finally, you will be introduced to the basic elements and policies of regulation of stock exchanges in the leading international financial centres of London and New York.

Unit 7: Regulation of Securities Markets in the European Union

The core principles of regulation of securities markets in Europe are introduced and discussed in this unit in light of the Financial Services Action Plan and regulatory efforts to create a pan-European securities market. The unit will describe and discuss the process and institutional framework of European financial integration, and outline the objectives and operational perameters of the Financial Services Action Plan. Finally, you will be introduced to the basic measures that have recently been adopted under the provisions of the Financial Services Action Plan.

Unit 8: Global Capital Markets and Development of International Rules

This unit introduces and outlines the international efforts towards the creation of common international rules and standards regulating international capital markets. The unit will describe and discuss the process of financial globalisation and how it affects the international regulatory framework. In studying it, you will examine the objectives and core elements of the international regulatory framework for primary and secondary securities markets. You will also study the principles, objectives and core elements of the international regulatory response to money laundering and international financial crime.

Tuition & Assessment

One two-hour examination and one assessed piece of written coursework in each module. Each course module will count for 10% of the total mark. Of this 10%, the examination will count for 70% and the coursework for 30%.