The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Regulation: The agony of the global supervisor

A handful of the world's top financial institutions have not one regulator but many, spread over diverse products and markets. These regulators, scared by Barings, Daiwa Bank and other disasters, are trying to plug holes in the supervisory net. But it's a tough job to coordinate oversight and to ensure that at least one supervisor has the full picture. David Shirreff reports

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







You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree