Keeping governments out of politics: transnational securities markets, regulatory cooperation, and political legitimacy

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Abstract
The emergence of transnational markets in securities issuance and trading is a dramatic development in the contemporary financial services sector with larger consequences for national policy-making. The liberalization of access to domestic securities exchanges, the progressive reduction of regulatory restrictions leading to product innovation such as derivatives trading, the growing involvement of transnational banks in securities dealing, and the elimination of capital controls have all combined to yield rapid change over the past fifteen years. The process is, however, relatively poorly researched. Folklore about the global markets abounds but much remains to be done to put the global integration of the markets into perspective and understand its complexity. Specifically, there has been a failure to analyse the consequences of the liberalization and transnationalization of financial markets for democratic political systems in an increasingly global market economy.