Corporate Governance

The Role of Stock Exchanges in Corporate Governance: The Role in Determining Listing Standards (Part 5)

By J. Robert Brown

We are discussing The Role of Stock Exchanges in Corporate Governance, a report issued by the OECD.  On p. 11 of the report is a table showing a number of stock exchanges and their role in the governance process.  The table explains whether the stock exchange has any role in setting listing standards and in surveillance.

In only one case does an exchange have no role in determining listing standards.  That occurs in France.  With respect to surveillance, the exchanges in Tokyo, London and the Netherlands have no surveillance role.  While not part of the table, the US is of course the opposite extreme.  The exchanges are entirely responsible for surveillance.  A recent speech by Commissioner Aguilar at the SEC indicated a need for the SEC to get into the surveillance business.  As he put it:

• One additional area where I think technological development is needed is market surveillance. Although SROs perform some surveillance, the SEC cannot outsource its responsibilities. The SEC's oversight responsibilities cover SROs themselves, and are broader than that of any particular SRO. The SEC's collection and processing of market information capabilities should reflect these responsibilities.

In short, the regulatory drift is potentially away from exchange monopoly on surveillance in favor of a more joint role in the US.

Full post as published by The Race to the Bottom on September 16, 2009 (boomark / email).