The Influence of Cross-Border Cooperation on Equity Market Liquidity

In a recent post on this blog, I described how IOSCO’s Multilateral Memorandum of Understanding (MMoU)—an arrangement intended to facilitate cooperation among regulators—improved cross-border enforcement of securities laws. In this post, I summarize a follow-up study showing that this enhanced enforcement significantly increased capital market liquidity by roughly 7 to 13 percent for domestic shares unaffiliated with foreign markets. The study also shows an even greater improvement for shares listed on markets outside an issuer’s home country. Cross-border enforcement is most important in these situations that involve multiple markets, regulators, and jurisdictions, and so it is not surprising that such … Read more

How Cross-Border Cooperation Improves Securities Enforcement and Financial Reporting

In a recent study, I investigate cross-border coordination among national securities regulators and its impact on enforcement and financial reporting. The paper provides an in-depth look at the cross-border enforcement program at the U.S. Securities and Exchange Commission (SEC), using publicly available data. The results are consistent with the conclusion that the IOSCO Multilateral Memorandum of Understanding  (MMOU) acts as a catalyst for increasing the SEC’s ability to pursue cross-border cases and improve financial reporting through stronger enforcement.

Studies that seek to isolate the economic effects of regulation, enforcement, and new laws often suffer from the criticism that changes … Read more