The New Governance of Global Capital Markets: Winner and Losers

A much overlooked yet vital part of the global economy is the infrastructure or ‘plumbing’ of global capital markets – the exchanges, clearing houses, and securities depositories. When they run smoothly, they facilitate capital formation and risk management and enable economic growth and prosperity. When they are poorly governed, corrupted or tampered with, they impose enormous costs upon society. This market infrastructure has undergone dramatic transformations in the last decade or two.

This project investigates how these transformations have been affecting core public policy objectives such as investor protection, reduction of systemic risk, as well as fairness, efficiency, and transparency in capital markets. Who are the winners and losers of these changes? In the wake of recent ‘flash-crashes’ in equity markets, regulators have begun to question the presumed optimality or efficiency of the present market infrastructure. Academic research in this area is urgently needed to ensure that the reform debate is not hijacked by any one special-interest group.