Competition Law and Financial Services by David Harrison

By David Harrison

Competition legislation underpins the marketplace economic system via prohibiting anti-competitive agreements and practices, and the abuse of dominant positions available in the market. until eventually the monetary concern it used to be extensively assumed that the monetary companies used to be hugely aggressive. This booklet explores the level to which this can be the case.

By analysing drawback and pre-crisis pageant legislation circumstances and examples from the united kingdom, the ecu and around the globe, David Harrison asks no matter if there exists stable reason behind monetary prone to be handled another way from the remainder of the marketplace economic system. the speculation of industry potency isn't really borne out in perform. He rather attracts upon John Maynard Keynes in analyzing the variations among cost mechanisms in product markets for "normal" items, and cost mechanisms in monetary and funding markets the place expectancies of the longer term are inclined to play a better function, resulting in higher rate fluctuations.

In this assessment, the e-book examines elements of the sensible functioning of capital markets corresponding to the phenomenon of herding behaviour by means of monetary individuals, how temporary behaviour through intermediaries may be to the drawback of savers and effective funding, the connection among funding markets and product markets and the level to which a similar pageant principles follow to undertakings taken with either. The booklet could be valuable to scholars, researchers and practitioners of banking and finance legislation, and advertisement and festival law.

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Although the mechanics of the sub-prime mortgage business were peculiar to the United States, the common denominator in all cases was a rapid increase in the supply of credit to real estate. The Icelandic example, where prices of residential real estate doubled between 2002 and 2007, stock prices increased by a factor of nine and the value of assets owned by the three main banks increased from 150% of gross Practice 31 domestic product (GDP) to 800% of GDP, was an extreme version of a common theme.

The information standard As a starting point, we might take observations by the influential US banker Walter Wriston, speaking in 1989 on the impact of global communications on the traditional economy and politics. Wriston argued in a speech in New York that the existence of a global market for news, money and capital has fundamentally altered the traditional power of governments and central banks to control events. Thus, whenever anything of importance happens anywhere in the world, the computer screens of tens of thousands of foreign exchange traders light up in the trading rooms of the world, and traders buy and sell currencies based on how they evaluate the news: This enormous flow of data has created the Information Standard which has replaced the gold standard and the Bretton Woods agreements.

The prohibitions set out in Chapter 2 on price-fixing between firms, and abusive pricing by dominant firms, which are enforced if they have an effect on trade in European Union, work to this end. Markets for finance and investment Until the financial crisis, it was widely assumed that the price mechanism in markets for finance and investment is essentially the same as in product markets for goods and services. This is an implication of the ‘efficient market hypothesis’, according to which the prices of securities always reflect all relevant information.

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