The Regulatory Frameworks for Markets and Underwriting

7.1 Securities Regulation

Securities markets are regulated to promote transparency, fairness, and investor protection .

US Securities Regulation:

  • Securities Act of 1933: Requires registration of securities offerings and full disclosure.

  • Securities Exchange Act of 1934: Regulates securities exchanges and created the SEC.

  • Sarbanes-Oxley Act (2002) : Increased corporate governance and financial reporting standards.

  • Dodd-Frank Act: Expanded SEC oversight of financial markets.

European Securities Regulation :

  • MiFID II/MiFIR: The cornerstone of European securities regulation.

  • Market Abuse Regulation (MAR) : Prohibits insider dealing, unlawful disclosure, and market manipulation.

  • Short Selling Regulation: Sets rules for disclosure and restrictions on short selling.

7.2 Insurance Regulation

Insurance is regulated separately from banking in most jurisdictions, focusing on consumer protection and solvency .

European Framework:

  • Solvency II is the key European regulatory framework for insurance companies . It is a risk-based approach to capital adequacy, mirroring the Basel framework for banking.

  • It defines three pillars similar to Basel: quantitative requirements, governance and supervision, and disclosure.

  • Requirements have become more demanding on companies and will continue to be so into the future, including on climate risks .

US Framework:

  • Insurance is primarily regulated at the state level in the US (state insurance commissioners).

  • The National Association of Insurance Commissioners (NAIC) sets model laws and standards.

7.3 Ethics and Governance Considerations 

All regulatory frameworks increasingly integrate ethical and governance requirements. Regulated entities must understand:

  • The implications of securities laws for the structure and operations of capital market participants .

  • The ethical issues for funds of different structures and in different jurisdictions .

  • The governance and regulatory environment for funds across different jurisdictions .

 
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