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As financial markets across the world become more integrated, the potential for financial shocks to be transmitted both from one jurisdiction to another and from one financial sector to another increases. At the same time differences in national regulatory arrangements can be the source of important competitive distortions between financial institutions. Against this background national authorities have been seeking to coordinate the regulation of securities firms and of batiks undertaking securities business. This paper, which is published in two parts, aims to clarify some of the policy issues arising from recent convergence initiatives by examining the US capital adequacy rules for US investment firms and contrasting the US approach with European securities regulation as formulated in the Capital Adequacy Directive. The first part of this paper was published in the previous issue of Journal of Financial Regulation and Compliance.

As financial markets across the world become more integrated, the potential for financial shocks to be transmitted both from one jurisdiction to another and from one financial sector to another increases. At the same time differences in national regulatory arrangements can be the source of important competitive distortions between financial institutions. Against this background national authorities have been seeking to coordinate the regulation of securities firms and of banks undertaking securities business. This paper, which is published in two parts, aims to clarify some of the policy issues arising from recent convergence initiatives by examining the US capital adequacy rules for US investment firms and contrasting the US approach with European securities regulation as formulated in the Capital Adequacy Directive. The second part of this paper will be published in the next issue of Journal of Financial Regulation & Compliance.

Having been hailed as the most important contribution to stabilising the US financial system after the 1929—33 crash, deposit insurance is now being blamed for financial destabilisation, particularly in emerging markets. This paper focuses on the relationship between deposit insurance and systemic stability in the banking system, drawing on recent experience in the USA, Europe and Japan. The conclusion is that if there is an embedded perception that in the last resort depositors will be protected beyond insurance limits then market‐orientated solution to the problems of ‘moral hazard’ and excessive risk taking cannot work.

Several recent developments (notably, the breakdown of traditional distinctions between different types of financial activity, the globalisation of financial markets and increasing emphasis on systemic stability as a regulatory objective) have prompted policy‐makers to search for an ‘optimum’ regulatory structure that is adapted to the new market environment. Further impetus has been given to this debate by the radical overhaul of regulatory structures, along quite different lines in Australia, the UK and Japan, and the ongoing deliberations within the US Congress over structured financial reform. This paper examines alternative ways of organising the regulatory function in the context of the new financial market environment. The first section reviews the objectives, targets and techniques of regulation. The second section describes the new market environment and the restructuring of the financial services industry. The third section assesses the implications of this new environment for the structure of regulation. The fourth section addresses the international dimension. The final section provides a summary and conclusion. The paper is based on a presentation made at the World Bank Conference, El Salvador, June 1998.

Regulation and compliance professionals and students of regulation will find these books interesting and thought provoking. Although many a reader would be justifiably sceptical about a book with ‘The Future of…’ in its title Alan Gait's work contains so much valuable historical detail about US banking, insurance and securities regulation that it manages to avoid being just another journalistic work of financial punditry. It is an ambitious book and raises some very big questions in the introduction. Was regulation of financial markets and institutions called for in the 1930s? Was deregulation of financial markets and institutions called for in the 1970s and 1980s? Is reregulation of financial institutions called for in the 1990s? What changes in regulation and financial structure are likely to take place by the year 2000? It seeks to answer these and many (almost too many) other questions by casting a historical perspective on each of the three industries, examining issues like structural change, the impact of technology and the future of all of the major players within the financial services industry and asking what they bode for the future of regulation. For those prepared to read all 386 pages it is a mine of information and, to a lesser degree, insights providing an excellent overview of the past, present and possible future US regulatory scene. However, the book has been written with the busy professional in mind who may be interested only in one of the three industries covered and so it has been designed to be read as a handbook into which one can dip and read only, say, the banking chapters, this automatically detracts from the book's ability to provide a sustained and layered intellectual analysis of some of the big questions asked in the introduction and leaves the reader with the impression of a descriptive account. Subject to that caveat the reader who wishes to deepen their knowledge of the US regulatory scene will enjoy the historical chapter on securities and investment regulation 1940–79 and the chapter on deposit insurance and bank failures puts the Savings and Loans debacle into perspective. Part Four on future prospects for regulation lacks rigour and detail but a useful glossary of US financial terms appears at the end of the book as does an Appendix of major legislation affecting US depository institutions which could have been usefully extended to cover securities and insurance legislation too.

Biennial budgeting and appropriations cycles have been a popular idea among many members of Congress for the past twenty years. Despite widespread bipartisan support for biennial budgeting in the 1980s, the first House vote on the subject, in 2000, resulted in a narrow defeat for biennial budgeting. This article analyzes the merits of biennial budgeting and the reasons for its defeat, arguing that during the 1990s biennial budgeting lost its sense of urgency because of the erasure of the federal deficit and became a more partisan issue than it previously had been.

This paper is published in two parts. The first, which is published here, starts by considering the background to UK banking supervision and examining the effectiveness of the Bank of England and BCCI's auditors in the supervision of BCCI. The author then assesses the suitability of the Banking Act 19.87 following which is a list of recommended reform measures. The first part of the paper concludes with a consideration of banking supervision in Luxembourg. Part two of the paper examines deficiencies in the international supervision of banking and will be published in the next issue of The International Journal of Regulatory Law and Practice, Volume 1 Number 3.

The purposes in this paper are: engaging in a critical examination of the framework of the banking regulatory framework in India; assessing the operational efficacy of banking regulatory and supervisory mechanisms; and providing an in‐depth legal analysis of the role of the Reserve Bank of India (RBI) as the country's central bank and the principal supervisory authority.

The method used is legal examination of regulatory practice and case‐study based analysis. It relies factually on official publications in the public domain, academic writings and newspaper reports to assess the impact of the fraud and explore the legal, regulatory and financial implications of the supervisory lapses.

The findings in the paper relate to the impact and extent of he Ketan Parekh fraud and the nature and scope of critical central banking supervision lapses. The paper concludes that such lapses can induce systemic problems in a key emerging economy like India especially when it is rapidly entering the second phase of major banking and financial reforms.

Various investigations are still underway as regards the Ketan Parekh fraud and several cases are being heard in courts and tribunals. The full extent of legal and regulatory liability is yet to be fully ascertained.

It is of immense significance to bankers, lawyers, auditors, consultants, researchers, jurists, law enforcement officials and those involved in financial and banking regulation.