| Laocoon, the Trojan priest, didn't trust the Greeks and their wooden horse. But before he could warn his fellow Trojans, the hostile gods sent two snakes to throttle him and his sons. The sculptor's treatment of this event seems to epitomize the struggle between the regulators and the regulated in today's financial markets. But who is being strangled and who's doing the strangling? A score of diverse institutions, operating globally in the major money centres and emerging markets, present supervisors with an increasingly tortuous task. "The concept 'small is beautiful' doesn't exist in the financial services industry," laments Tom de Swaan, executive director at Holland's central bank. No single lead supervisor can hope to get the full picture - encompassing all subsidiaries and financial affiliates - of one of these sprawling entities which might include banking, fund management, securities and commodities trading, and insurance. Indeed, it might be dangerous to try. "Over-supervision can disrupt the markets," warns Clifford Smout, head of supervisory policy at the Bank of England. There may be legitimate worries about systemic risk but "you don't want to extend the regulatory net to give the impression that dealing with subsidiaries is as safe as dealing with the [regulated] bank". The |