NCJ Number
140897
Journal
Law & Policy Volume: 13 Issue: 4 Dated: special issue (October 1991) Pages: 297-326
Date Published
1991
Length
30 pages
Annotation
This paper describes an empirical study of futures market regulation in three jurisdictions: Chicago, Hong Kong, and Sydney.
Abstract
It focuses on private ordering and argues that informal mechanisms of social control are crucial in maintaining market order and curbing trading abuses. The author contends that peer group pressure, fear of being ostracized, leverage of large institutional clients, transparency of certain market dealings, and opportunities for "pay back" between "repeat players" are far more important in ordering behavior than remote and often unenforced rules imposed by government or by exchanges themselves. He also suggests that, in order to understand "crime in the pits," the focus should be on criminogenic structures which facilitate fraud through specific combinations of opportunity and risk. Structural factors also account for the relative success or failure of private ordering in constraining trading abuses in different markets. A focus on governmental regulation or on other formal mechanisms of social control is too narrow. A broader conception of the regulatory process is needed to fully understand the complexities of social control in futures markets. This broad conception should incorporate the central importance of structural variables, as well as informal mechanisms of social control. 50 references and 53 notes