TENTATIVE SYLLABUS
International Regulation of Securities and Derivatives Markets
Vijay Srinivas Tata
Sau Ngan Wong
Spring 2013
Course Objective: Over the last fifteen years, the securities markets have been transformed from
institutions that primarily served domestic capital formation to global institutions that facilitate the
enormous transfer of capital between nations at electronic speeds. This transformation is challenging the
traditional domestic focus of securities regulation by requiring domestic regulators to regulate the offer
and sale of foreign securities in their domestic jurisdictions, harmonize regulatory rules and procedures,
and cooperate in the enforcement of domestic and foreign securities laws.
In the coming decades, the study of securities regulation will require an international perspective in
addition to the traditional domestic focus of most regulation. This course will provide an introduction to
the operation and regulation of securities markets in the context of modern international transactions, with
an emphasis on US, EU securities markets and initiatives undertaken by international standard setters
such as by Financial Stability Board (FSB) and the International Organization of Securities Regulators
(IOSCO). At the end of the course, it is expected that students will have a solid grounding in the
international structures that increasingly harmonize securities regulation throughout the world; the nature
of international securities transactions and the legal framework in which they function; modern financial
instruments that function on a global basis; and the major issues and challenges faced by the international
securities markets and regulators resulting from the globalization of the securities markets. Using this
groundwork, students should be able to continue their studies in depth in the various subtopics of the
regulation of international markets and transactions that interest them.
Prerequisites: A course in securities regulation or permission of the professor is required to enroll in the
course.
Credits: The course will be a two-credit course that will meet once a week for 1 hour 50 minutes for each
session.
Class attendance and participation: Attendance is required. Everyone is expected to be prepared and
ready to participate in every class.
Exam for the Course: The final exam will be a standard law school exam. Students may consult the
casebook, class notes, and class materials during the exam. Students may not, however, consult other
materials, including books or articles.
Paper: In lieu of an exam, students may elect to write a paper for the course. Please contact us regarding
the topic, length, etc., if this is your choice.
Grading: The grade will be based on the final exam or paper, subject to the following. The grade may be
raised or lowered by one or two points based on class attendance and participation. We retain the option,
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however, to modify the grade to a greater extent (including failure) where a student misses a substantial
number of classes without justification (for example a severe illness).
Textbook: Scott and Gelpern, International Finance: Transactions, Policy and Regulation, Foundation
Press (18th Ed.) and various selected readings that are available in digital course file.
CLASS 1: Overview: The International Financial Architecture and Harmonization of Securities
Laws
Introductory Course Matters – globalization of Securities Markets – International Financial Architecture –
Multilateral International Standard Setters – International Private Law Institutions – the Influence of
Multilateral Organizations on National Legal Structures
Readings: Scott, International Finance, Chapter 1, Pgs. 1171-1178
CLASS 2: Comparative Theories of Regulation
Rules vs. Principles Regulation; Competition vs. Regulatory Arbitrage; The Legal System as a Basis for
Regulatory Approach
Readings: FSA Principles of Regulation and HM Treasury, New Approach to Finance
Regulations, Pgs. 7-13;
Reference: La Porta, et al, Legal Determinants of External Finance; Roe, Legal Origins, Politics
and Modern Stock Markets
CLASS 3: Comparative National Structures for the Regulation of Securities and Derivatives
Markets
Four Major Structures for Regulation; Councils of Regulators for Systemic Risk
Readings: Scott, Pages 24-84;
Reference: Dodd Frank Act Sections 101-156 on Financial Stability Oversight Council; IOSCO,
Objectives and Principles of Securities Regulation; IMF Working Paper WP/06/57 International
Experience with Integrated Financial Sector Supervision; CEBS – Ten Principles for Colleges of
Supervisors
CLASS 4: The Transnational Reach of Securities and Derivatives Laws
The Extra-Territoriality of Sarbanes-Oxley and Dodd-Frank; The Regulation and Supervision of
International Conglomerates; Foreign Internet Brokers
Readings: Morrison vs. National Australia Bank; Dodd-Frank SEC.929P (b) Extraterritorial
Jurisdiction; SEC Interpretation on Use of Internet Websites
Case Study: Morrison vs. National Australia Bank
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CLASS 5: Regulation of Foreign Securities and Derivatives
ADRs and GDRs; IPOs of Foreign Securities; Listing Foreign Securities on Domestic Exchanges;
Offering Domestic Securities in Foreign Jurisdictions; Reverse Mergers; Offering Foreign Exchange
Traded Derivatives in Domestic Markets
Readings: Scott, Chapter 2, Pages 87-124; Pages 848-58; SEC Bulletin on Reverse Mergers
Case Study: In the Matter of Accountants for China Energy Savings
CLASS 6: Regulation of Foreign Intermediaries, Markets and Other Market Participants
Regulating Foreign Brokers; Multinational Brokers; Foreign Exchange Terminals; Foreign Auditors and
Credit Rating Agencies
Readings: Scott Chapter 2, Pages 216-218; Tafara and Peterson, A Blueprint for Cross-Border
Access to U.S. Investors; Madison and Green TIAA-CREF Response to A Blueprint
Case Study: Barings, Scott, Pgs. 858-873
CLASS 7: International Developments in Exchanges and Exchange Regulation
Cross-Border Exchange Groups: NYSE/EuroNext; NASDAQ/OMX; CEE Stock Exchange Group;
Comparative Regulation of Dark Pools, High Frequency Trading, Sort Sales and Taxation
Readings: Scott, Pgs. 142-151; Instinet, Effectiveness of Short Sale Bans; Recommendation on
Regulatory Response to Events of May 10, 2010
Case Study: In the Matter of Pipeline Trading Systems
CLASS 8: Comparative Corporate Governance
OECD Principles of Corporate Governance; Board Independence; Codes of Conduct; Minority
Shareholder Protection and Auditing
Readings: Scott, Chapter 2, Pages 151-202
Reference: OECD, Principles of Corporate Governance; Wymeersch, Enforcement of Corporate
Governance Codes
Case Studies: Enron and ENRC
CLASS 9: Institutional Investors: Hedge Funds; Sovereign Wealth Funds and Mutual Funds
Definition, Characteristics and International Structure of Hedge Funds; International Mutual Fund
Structures and Operation; and the Rise of the Sovereign Wealth Fund
Readings: Scott, Chapter 16; OECD Report on Sovereign Wealth Funds;
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Case Study: Report of President’s Working Group on Long Term Capital Management, Pgs. 117
CLASS 10: The Regulation of Exchange Traded and OTC Derivatives
Types of Derivatives: Futures, Options, SWAPS, Collateralized Debt Obligations; etc.; Recent
Regulatory Developments in the Trading and Clearing of OTC Transactions
Readings: Scott, Chapter 15
Reference: Chapter 14
Case Study: CFTC Order in the matter of Sumitomo
CLASS 11: Sovereign Debt
Past and Current EU Crises; the Role of the IMF; Collective Action Clauses; ICSID Arbitration
Readings: Scott, Chapter 19
Case Study: Greece
CLASS 12: International Enforcement of Laws Regulating Securities and Derivatives
Multilateral Cooperation; Comparative Enforcement Issues: Rogue Traders and Insider Trading
Readings: Scott, Chapter 2, Pages 124-142; IOSCO Multilateral MOU; Gevurtz, The
Globalization of Insider Trading Prohibitions
Case Studies: Stanford
CLASS 13: The Use of International Structures to Avoid Regulation
Off-Shore Financial Centers, Shadow Banking and Money Laundering
Readings: Scott, Chapter 22, BIS/FSB Note on Shadow Banking; Morriss, the Role of Offshore
Financial Centers in Regulatory Competition 2008
Case Study: SEC vs. WYLY; Wachovia
CLASS 14: The Future of Regulation
Harmonization vs. Competition and Wrap-up Meeting
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