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The Justification of Financial Futures Exchanges.

Campbell, David and Picciotto, Salomone (2000) The Justification of Financial Futures Exchanges. In: Modern Financial Techniques, Derivatives and Law. International banking, finance, and economic law (16). Kluwer Law International, The Hague ; Boston, pp. 121-133. ISBN 9041197818

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Abstract

The invention of exchange-traded financial futures by commodity exchanges has been justified by Chicagoan financial economics and law and economics on the basis of the unrealistic assumption that trading is costless. Acceptance of this quite circular argument has led to the delegation of extensive powers of self-regulation as public authorities have abnegated their responsibility to evaluate the regulation of derivatives trading, including matters such as the development of new financial products and the governance of exchanges, in welfare-economic terms. Instead of a prejudice toward market �freedom�, there should be stronger public consideration of the optimal public-private mix of regulatory governance structures. This paper proposes criteria for the evaluation of the functional justification of exchange-traded futures as a guide for public policy aimed at reducing the volatility of financial markets.

Item Type: Contribution in Book/Report/Proceedings
Uncontrolled Keywords: derivatives futures regulation law legitimacy trading
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Departments: Faculty of Arts & Social Sciences > Law School
ID Code: 517
Deposited By: Prof Sol Picciotto
Deposited On: 21 May 2007
Refereed?: No
Published?: Published
Last Modified: 26 Jul 2012 22:08
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/517

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