Self-regulation in the Canadian securities industry: Funnel in, funnel out, or funnel away?

Lokanan, Mark

doi:10.1016/j.ijlcj.2014.11.002

Cited by 14 publications

(59 citation statements)

References 19 publications

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“…Unified regulation generates economies of scale as expertise are interconnected across sectors and, therefore, seen as more cost effective than specialist regulation (Goodhart and Schoemaker, 1993). Regulation under the unified model is considered to be more flexible and helps achieve competitive neutrality by avoiding excessive rule-making -a trait that characterizes agencies trading and dealing with multiple products (Goodhart, 2000;Lokanan, 2014a;Masciandaro, 2006). It is also argued that inter-agency problems such as turf wars (Williams, 2012) and political interference (Calomiris & Haber, 2014), which characterize the multi-agency model, can be subverted and addressed under a unified model (Ryder, Turksen and Hassler, 2014;Sinclair, 1997;Schwarz, 2014;Yackee, 2013).…”

Section: The Wider Debate On Fragmentationmentioning

confidence: 99%

“…On the other extreme, the arguments for a multi-agency model are as strong, if not stronger, than the arguments for the unified model (Goodhart, 2000;Lokanan, 2014a;Masciandaro, 2004Masciandaro, , 2006. Chief among these arguments is that a unified regulatory model can suffer from diseconomies of scale.…”

Section: The Wider Debate On Fragmentationmentioning

confidence: 99%

“…The theoretical justification for self-regulation is that it works to safeguard the public interest (Brockman and McEwen, 1990;Lokanan, 2014a;Posner, 1974). This regulatory approach assumes that a system of self-regulation has sufficient powers to "investigate and discipline the unethical behaviour of its members" (see also CFA, 2007, p. 2).…”

Section: Economic Theory Of Regulationmentioning

confidence: 99%

“…Regulation not only fails to counter monopolization but, on the contrary, is used to sustain it (Hertog, 2010). Peltzman (1976) went on to argue that even when regulation is influenced by big industry players, regulators trying to work in the public interest rarely succeed (Brockman, 2004;Lokanan, 2014a;Williams, 2004).…”

Section: Economic Theory Of Regulationmentioning

confidence: 99%

“…The point to keep in mind here is that SROs have considerable discretion. They can enforce (or choose not to enforce) the rules as they see fit; that is, they are not compelled to invoke sanctions that will have adverse consequences on their members (Brockman, 2004;Lokanan, 2014a). Hence, the present study seeks to evaluate the extent to which the IDA is policing its members and enforcing compliance by holding them accountable to rules and regulations.…”

Section: Introductionmentioning

confidence: 99%

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Self-regulation and compliance enforcement practices by the Investment Dealers Association in Canada

Lokanan

2017

JFRC

Self Cite

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Purpose This paper aims to examine the enforcement practices of the Investment Dealers Association of Canada (IDA) and argue that self-regulation simply does not work in the financial sector, as the sanctions available are neither applied with sufficient severity nor are the responsibilities for enforcement adequately divided between self-regulation, provincial securities commissions and the police. Design/methodology/approach The core compliance data for the study came from the IDA’s tribunal cases that were heard between 1984 and June 2008. The theoretical approach involves the invocation of classic articles by the likes of Stigler, Posner and Becker, the essence of whose conclusions is that institutions will act in their own best interests and cannot be expected to act in the public interest. Findings The findings show that over the period from 1984 to 2008, the severity of the sanctions increased consistently over the period. When penalty ceilings were increased, penalties increased. When in the latter phase of the period, public members (i.e. non-members of the industry) chaired the tribunals, penalties also increased. Research limitations/implications Researchers can use the data to write a paper which asks “Why did the IDA tribunal penalties increase so consistently with time?” Future research could canvass various possible explanations, including the one presented in this paper, to focus sustained attention on the issue of self-regulation. Originality/value This study is the first to systematically examine the enforcement performance of the IDA.

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