Institutional market imbalance and licensing in securities markets

Abstract

Purpose

The paper discusses how proficiency‐based licensing of professionals may promote a culture of fair play and thus counteract economic and white collar crime in markets characterised by unilateral focus on financial targets and a culture of competition.

Design/methodology/approach

The crime prevention potential of licensing schemes is analysed using disciplinary sanction decisions, documentation of how the licensing scheme for professionals working in the Swedish securities market is organised, interviews with representatives of the scheme and previous research.

Findings

Licensing schemes have good potential to strengthen a culture of fair play and thereby prevent criminality and mismanagement. Particular emphasis should be put on the opportunity to use such schemes to raise regulatory awareness in the industry and thereby suppress the growth of criminogenic sub‐cultures in firms. When combined with the potential of this self‐regulatory approach to give licence holders a sense that obligations and sanctions arising from the licensing scheme emanate from the industry itself, the crime‐preventing effect may be substantial.

Originality/value

Even though licensing of professionals has become an increasingly common phenomenon in securities markets worldwide, licensing schemes have yet to be documented, analysed, or studied. Nor are there any research overviews devoted to the mechanisms which more precisely explain how unilateral focus on financial targets is a causal factor in economic and white collar crime. Understanding of the organisation and potential effects of licensing schemes would be very useful when initiating and further developing action programmes.

Citation

Engdahl, O. (2013), "Institutional market imbalance and licensing in securities markets", Journal of Financial Crime, Vol. 20 No. 1, pp. 39-51. https://doi.org/10.1108/13590791311287346