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Contrasting Worldviews at Bank and Securities Market Regulators
Author(s) -
Flannery Mark J.
Publication year - 2020
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12732
Subject(s) - sophistication , broker dealer , business , national best bid and offer , commission , financial system , securities exchange act of 1934 , hybrid security , third market , asset (computer security) , investment banking , private placement , financial market , security market , value (mathematics) , bank regulation , finance , accounting , social science , computer security , machine learning , sociology , computer science
Bank and securities regulators operate with different attitudes about the appropriate regulation of financial institutions and markets. Bank regulators’ prudential oversight protects depositors from worrying about the repayment of their bank claims. In contrast, securities market regulators tend to presume that security markets (almost) always clear quickly at prices close to the asset's fundamental value. These regulators seek to assure full disclosure of information, which facilitates active securities trading. In the United States, the Securities and Exchange Commission's (SEC) investor protection duties are tailored to the financial sophistication of individual investors.