[ExI] Replacing Government Oversight, Deregulating Stock Exchanges

Lee Corbin lcorbin at rawbw.com
Sat Apr 12 12:40:57 UTC 2008

Tom also wrote

> Rafal wrote: "A prime example is Sarbanes-Oxley,
> which imposed huge costs that disproportionately
> afflict smaller businesses, and thus serve to limit the
> competition against entrenched large companies -
> exactly the companies that lobby the government
> and hire former SEC employees (the "revolving
> door" phenomenon)."

Rafal is right on target, as usual.

> Well Lee, global competition is providing an example
> of lighter market regulation. When Sarbanes-Oxley hit
> US business (as Rafal mentioned), some businesses
> based in both New York and London dropped their New
> York listing. A couple of years ago, it was widely
> trumpeted that London had overtaken New York as a
> global financial centre as it had a mix of US and
> European investment banks in a place with fairly light
> touch regulation by global standards.

Good news!

> In fact, the UK leads in low-regulation stock
> markets. To quote
> http://en.wikipedia.org/wiki/Alternative_Investment_Market
> "The AIM has also started to become an international
> exchange, often due to its low-regulatory burden,
> especially in relation to the Sarbanes-Oxley Act
> (though only a quarter of AIM-listed companies would
> qualify to list on a U.S. stock exchange even prior to
> passage of the Sarbanes-Oxley Act[1]). As of December
> 2005 over 270 foreign companies had been admitted to
> the Alternative Investment Market."
> The AIM is so colossally low-regulatory that London's
> becoming a haven for people seeking to raise funds to
> go drill for oil,gold,copper or anything else that
> requires highly speculative prospecting and in most
> markets would require massive disclosures. It's also
> been the home of a £375million fraud, and a haven for
> offshore financial vehicles. Time will tell if this
> low-regulatory regime survives or if pressure from
> other countries persuades the UK to tighten up.
> As an aside, many stock markets are themselves
> publicly quoted companies, and there is a process of
> consolidation going on around the western world -
> there's a bidding war for the London Stock Exchange,
> and other stock exchanges/bourses are under bids at
> the moment.

Thanks very much for that. The entire AIM entry in wikipedia
was also very helpful.  I hope that the way that things are
done is not so thoroughly entrenched that the world's biggest
economy cannot learn from this.


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