Securities Market Integration in Asia: What Would Be the Theoretical Approach?
Zahid, Md Anowar, Ali, Hasani Mohd, Suffolk University Law Review
Today, securities offerings and trading have become, to a remarkable extent, global in the same vein as other economic and business activities. The globalization is taking place mainly through integration of national securities markets. The principal examples of such integrated markets are the European union (EU) and the Multijurisdictional Disclosure System (MJDS) between Canada and the united States. Recently, the Association of Southeast Asian Nations (ASEAN) initiated an attempt to integrate securities markets in Asia. This paper will go over the integration efforts of these three regions to see what theoretical approaches they have taken towards their goal.
Integration between different nations is not an easy task because they are politically, economically, and legally divided and diverse. A look into the theoretical perspective will describe how integration has been achieved despite these diversities. As integration has already successfully taken place in Europe and North America, their approaches will be examined first. After that, this paper will evaluate the ASEAN approach to determine if it is following the same line of theoretical construction to achieve its goal. (2)
II. INTEGRATION IN EUROPE
The EU of today is a supranational organization that has integrated the economic, political, security, domestic, and justice regimes of twenty-five European states. (3) Its origin lies in three organizations: the European Coal and Steel community (EcSc), the European Atomic Energy community (Euratom), and the European Economic Community (EEC). The ECSC was formed by treaty in 1951 to integrate the coal and steel market in Europe and brought together six states including France and Germany, the two bitter enemies of the Second World War. With this act, Europe started its journey as a community, "basically as an economic organisation, although the final objectives were clearly political." (4) The other two organizations, Euratom and the EEC, followed in 1957 under two different treaties. (5)
Of the above institutions, the EEC (hereinafter EC) was the leading one. (6) Its goal was economic integration and political cohesion. (7) The economic development "was always planned with grander aspirations," (8) because, for some theorists, economic integration "inevitably begets political integration too, even without any explicit initiatives directed at the political sector." (9)
The promoters of the EC envisioned a twofold means of achieving these goals: establishment of a common market and progressive harmonization of economic policies among the member states. Indeed, economic success as a goal and a common market as a means to reach that goal received prominence in EC propaganda and activities. (10) The common market, in this context, promoted four unfettered freedoms (11): namely the free movement of goods, (12) persons, (13) services, (14) and capital (15) under equal conditions of competition. (16) To facilitate their movement, the EC adopted a combined approach--harmonization of some rules and standards and mutual recognition of member states' domestic regimes. The reason behind this approach was that harmonization alone would not be an effective method of integration because detailing technical specifications would be time-consuming, "overregulatory," (17) and probably impossible given the diversity of the legal, administrative, and regulatory systems of the member states. (18) Conversely, resorting to mutual recognition alone would not be sufficient, either, because of the increasing size of the competitive market of Europe.
However, it is not easy to achieve the combined approach in practice. Member states, with a variety of diversities, have different legal and administrative requirements. (19) For example, they have varying standards for products, qualifications for professionals, and regulations for services. These differing requirements stand in the way of the four freedoms. …