16 November 2011

Regulators are no guarantee

Most Financial Markets these days suffer from a severe dose of over-regulation. But it is in many cases the wrong sort of regulation. Agencies and financial firms are stuffed full with box-ticking bureaucrats but they are quite useless in spotting accidents before they happen. The recent case of the MF Global bankruptcy illustrates that too many regulators can leave serious gaps in the safety belt that is supposed to protect investors from fraud and malpractice. A mature financial market such as the USA still has not been able to construct a fail-safe system of investor protection and the preoccuption of the presidential hopefuls - war and tax cuts - gives little hope that there will be an improvement soon.