A Response to Pierre-Hugues Verdier by Eric Pan

by Harvard International Law Journal

[Eric Pan, an Associate Professor of Law and Director, The Samuel and Ronnie Heyman Center on Corporate Governance, responds to Pierre-Hugues Verdier, Mutual Recognition in International Finance]

Pierre-Hugues Verdier has written an extremely important paper about one of the key regulatory strategies in international finance.  As Prof. Verdier has noted, many jurisdictions have applied mutual recognition arrangements to provide cross-border access to financial services providers, issuers and investors, and he skillfully analyzes the challenges facing mutual recognition arrangements.  In order to provoke a further discussion about the importance of mutual recognition in international financial regulation, I wish to draw out some of the points made by Prof. Verdier and express additional thoughts regarding how mutual recognition arrangements have been used in the past, the implications for future mutual recognition arrangements and the main challenges facing mutual recognition arrangements.

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A Response to Pierre-Hugues Verdier by Stavros Gadinis

by Harvard International Law Journal

[Stavros Gadinis, an Assistant Professor of Law at U.C. Berkeley School of Law, responds to Pierre-Hugues Verdier, Mutual Recognition in International Finance]

Pierre Verdier’s piece, “Mutual Recognition in International Finance,” centers on a fundamental question in this area of the law: how can regulators from one state admit inside their borders institutions and products shaped under another state’s regime, without imposing additional requirements to admission? Lifting regulatory barriers is the primary step towards a truly global financial market, because it removes high transaction costs that constrain capital flows. However, opening the regulatory gateways to foreigners is a matter of heated debate, which typically evokes rational objections as well as deep-rooted fears: do these foreign institutions and products provide to investors similar safeguards to those honed after decades of domestic regulation? Will the sudden influx of – perhaps more cost-effective – foreign providers put the domestic industry in a competitive disadvantage? Could the admission of foreigners ultimately undermine the importance of domestic regulators by providing an official back-door channel into a closely guarded domestic market?

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Mutual Recognition in International Finance by Pierre-Hugues Verdier

by Harvard International Law Journal

[Pierre-Hugues Verdier, an Associate Professor of Law at the University of Virginia School of Law, describes his recently published article Mutual Recognition in International Finance]

In the absence of an international organization devoted to financial regulation, the rapid globalization of finance since the 1970s has taken place against a legal background shaped primarily by national regulators.  As the multiplication of large, transnational financial institutions and cross-border transactions increased the need for international policy coordination, regulators responded by setting up transgovernmental regulatory networks (TRNs) and adopting soft law instruments.  In an article published in 2009, I argued that TRNs suffered from significant limitations stemming from domestic legal and political constraints, their inability to overcome distributive obstacles to harmonization, and their lack of monitoring and enforcement capabilities.  In the aftermath of the financial crisis, many commentators agree that existing coordination mechanisms did not live up to expectations in pivotal areas such as bank capital standards.  Thus, while TRNs are likely to remain an important component of financial governance, we need a more complete understanding of the various means through which states can cooperate to ensure effective cross-border financial regulation and market access.

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Harvard International Law Journal, Vol. 52(1): Online Symposium

by Harvard International Law Journal

The Harvard International Law Journal is proud to partake in its inaugural online symposium hosted by Opinio Juris. Beginning today, each day this week we will be bringing you discussion surrounding one of the articles in our recently released Volume 52, Issue 1. We would like to thank Opinio Juris for partnering with us, as well as the many contributors who have made this online symposium possible.

Our discussion begins today with Mutual Recognition in International Finance by Pierre-Hugues Verdier (U. Virginia). This article on transnational financial regulation proposes a theoretical account of mutual recognition that identifies its potential benefits, the cooperation problems it raises, and the resulting institutional frameworks in multilateral and bilateral settings. Stavros Gadinis (U.C. Berkeley) and Eric Pan (Cardozo) will provide responses to this article.

On Tuesday we will feature What if Europe Held an Election and No One Cared? by David Schleicher (George Mason). This article takes a comparative look at European Parliament elections, finding that their mismatch problem has many similarities with American state and local elections and then proposing election law solutions. Samuel Issacharoff (NYU) and Erin F. Delaney (Columbia) provide a joint response to this article.

Wednesday will provide debate over On a Differential Law of War by Gabriella Blum (Harvard). This article offers an analytical framework for considering whether some countries should be held to higher humanitarian standards during war by analogizing to international trade and climate agreements where obligations have been linked to capabilities through the principle of Common-but-Differentiated Responsibilities (CDRs). Kevin Jon Heller (Melbourne) will give his thoughts on this article.

On Thursday the discussion will shift to The Evolution of Hostile Takeover Regimes in Developed and Emerging Markets: An Analytical Framework by John Armour (Oxford), Jack B. Jacobs (Justice, Delaware Supreme Court) & Curtis J. Milhaupt (Columbia). This article traces the development of national regulatory responses in the United States, the United Kingdom, and Japan, and proposes an analytical framework that is then extrapolated to provide insights on emerging markets including China, India, and Brazil. A response will be provided Zen Shishido (Hitotsubashi University, Japan).

Finally, on Friday, we will conclude with Universal Exceptionalism in International Law by Anu Bradford (U. Chicago) & Eric A. Posner (U. Chicago). This article argues that all major powers, not just the United States, are similarly “exceptionalist,” in the sense that they take distinctive approaches to international law that reflect their values and interests. Robert Ahdieh (Emory) will provide his thoughts on the article.

We hope you join us all week for our launch of Volume 52, Issue 1 and our first ever Opinio Juris Symposium.