International Financial Regulation – LW613
Second Term
Module director: Professor Agasha Mugasha
This module introduces the main themes in the regulation of the global financial
industry. It is designed to show why and how governments and public authorities
intervene in the operation and activities of financial institutions and markets. The
module does not require prior knowledge of financial regulation.
After a short survey of the purposes and different approaches to financial regulation
and enforcement, the module uses UK regulation as a case study for regulating some
key aspects of the financial industry, particularly the banking industry and capital
markets, that have a significant international dimension. The main recurring theme is
the necessity for cooperation among different national regulators in dealing with a
complex global financial system.
The readings provided by the module director consist of some seminal and recent
pieces on the topics that are studied and students are expected to read them before
class. There is also very rich material in the library and on websites and students are
advised to consult more sources as necessary.
The readings and classes will not cover the topic of law and economics, which is
considered by many scholars as important to financial regulation. Students are
encouraged to familiarise themselves with this topic.
Key topics:
1. The global dimension of financial regulation
2. Objectives of financial regulation, supervision and enforcement
3. Prudential regulation of banks
4. Preventing abuse of financial system: the concept and legal dimension of
financial crime
5. Banking and capital markets: overview of capital markets
6. Banking and capital markets: insider dealing and market abuse
7. Financial regulation in developing countries.
Selected References
Website of the Financial Services Authority (FSA).
D Singh, Banking Regulation of UK and US Financial Markets (Ashgate, 2007)
J Gray and J Hamilton, Implementing Financial Regulation (John Wiley, 2006)
W Blair, Banks and Financial Crime: The International Law of Tainted Money
(Oxford University Press, 2008).
KK Mwenda, Legal Aspects of Financial Services Regulation and the Concept of a
Unified Regulator (World Bank, 2006)
C Goodhart, Financial Regulation: Why, How and Where Now? (Routledge, 1998)
S Valdez, Introduction to Global Financial Markets (4th edn, 2003)
K Alexander et al, Global Governance of Financial Systems, The International
Regulation of Systematic Risk (Oxford University Press, 2006)
A Mugasha, The Law of Multi-bank Financing: Syndicated Loans and the Secondary
Loan Market (Oxford University Press, 2007) chapter 10.
2
Course Content
The following topics will be covered:
1. Overview of financial markets and institutions
S Valdez, Introduction to Global Financial Markets (4th edn, 2003).
K Alexander et al, “Global Governance and International Standard Setting”
chapter 2 in K Alexander et al, Global Governance and Financial Systems
(Oxford, 2006)
See also M Giovanoli, ed, International Monetary Law, OUP 2000 (not included)
See also “The International Legal Framework for International Financial
Regulation” chapter 3 in K Alexander et al, Global Governance and Financial
Systems (Oxford, 2006) (not included)
2. Rationales and techniques of financial regulation
C Goodhart, et al, Financial Regulation: Why, How and Where Now? (1998)
chapters 1 and 9
** This will include a discussion on self-regulation
3. Institutional structure of financial regulation: UK, EU, and international.
C Goodhart, et al, Financial Regulation: Why, How and Where Now? (1998)
chapter 8.
D Singh, “Modernising Financial Regulation” chapter 1 in D Singh, Banking
Regulation of UK and US Financial Markets
4. The Financial Services and Markets Act 2000 – key themes
5. Prudential regulation of banks: focus on Basel II
D Singh, “Legal Aspects of Prudential Supervision” chapter 2 in D Singh,
Banking Regulation of UK and US Financial Markets.
D Singh, “Enforcement Powers and Banking Supervision” chapter 4 in D Singh,
Banking Regulation of UK and US Financial Markets.
Client notes provided by Clifford Chance (2007).
6. Preventing abuse of financial system: the concept and legal dimension of
financial crime
3
World Bank / IMF study on financial crime
The Fraud Act
The FSA website
Anti Money Laundering legislation; note also Terrorist financing
7. Capital markets regulation: overview
* Policy and theory in Securities Regulation / Capitlal Markets Law, chapter
17 in B Pettet, Company Law, 2nd edition
8. Banking and capital markets: Insider Dealing and Market Abuse
* The Regulation of Insider dealing and Market Abuse, chapter 20 in B Pettet,
Company Law, 2nd edition.
* A Mugasha, The Regulation of syndicated loans and the secondary loan
market practices.
9. Financial regulation in developing countries: focus on IMF and World
Bank.
* Multi-lateral sources of funds: The International Monetary Fund
* Multi-lateral sources of funds: The World Bank