Regulations have trailed the opportunities and benefits presented by technology. The SEC has only recently changed its regulation to allow the delivery of shareholder information by the internet. The internet presents the world with an opportunity for a truly global capital market. Regulation is critical to the integrity and credibility of equity markets. However, in an era of global business and the internet there are limits to the reach and effectiveness of regulation. My spam filter receives at least 10 emails a day recommending the purchase of the shares of a listed company. I suspect many receive similar emails. It is difficult to see how any method of regulation could protect an investor from Spam, or point to point communication. Can we protect the “investor” in a world where information can travel from individual to individual, companies can shift countries and advisers could use the internet to mask their identity. The challenge for global regulators is real. A careful balance must be struck between the need for efficient and effective capital markets, effective investor protection at a minimum of transaction costs. The efficient and effective operation of global capital markets is critical to capital formation, economic growth, taxes to fund government and having available resources to address the critical environmental, health and social problems of our time.

Economic development and new technologies can require significant adjustment for existing players. In financial markets, many of these business models were formed in the early 1900′s. Large organisations and signficant infrastructure was required to distribute information from point to point. In an era of the internet, the cost of distributing information point to point is almost zero. Information distribution business based upon old business models must adapt. Given the significant investments, many current players are unable to change. Only new entrants have the flexibility to offer new business models offered by the internet.