Legal Aspects of a Global Securities Market
SIMON SACKMAN and MARGARET COLTMAN
Although the world is becoming a global market place for securities, this does not mean that there is, or indeed will be, a single capital market. Instead, what we now have is a collection of capital markets, which are becoming increasingly integrated and global in scope, with an increasing amount of freedom of movement between the markets. The global market has over recent years undergone a period of unprecedented change, fuelled by increasing demands from institutional investors, particularly in the US, by a growing wave of privatisation and by improvements in technology, which now make it possible to access markets, in real time, from anywhere in the world. Deregulation has been another important factor, not least the relaxation of exchange controls in the early 1980s.
For many countries, particularly the emerging markets, the development of a securities market which will attract cross-border investment is of fundamental importance to their economic development. What these markets must recognise, however, is that if they are to attract investment, certain key safeguards must be met. First, adequate standards of investor protection are required in relation to offerings of securities. Secondly, investors need to be able to deal and to settle dealings in a timely and efficient manner. Investors also need to be confident that market manipulation is inhibited and that the institutions through which they deal are reputable and are operating on a sound basis. Even in the more sophisticated securities markets, such as the US and the UK, where these standards have long been recognised as minimum requirements, an international offering gives rise to legal issues concerning the interplay of the applicable laws and requires the co-ordination of different practices, as well as an acknowledgement on the part of the regulators that their insistence on compliance with local regulation by foreign issuers may be inhibiting the development of their market and prejudicing the interests of local investors.
The globalisation of the securities market also means that where a particular practice has been used successfully in one jurisdiction, there will be demand for it to be used elsewhere, to the same effect. In addition, investors