Development of the regulatory framework of securities market supervision post-GFC

The objective of this paper is to analyse changes in securities market supervision and regulation by investigating the impacts of the 2008 global financial crisis (GFC) on the conceptual framework of securities market supervision (SMS). Post-GFC, the trend of SMS is characterised by a move away from the market-based approach and an increasing reliance on the risk-based approach. Further, the macro-prudential supervision approach relying on the involvement of the securities regulator has become common practice. First, this paper identifies the theoretical framework of the SMS prior to the GFC. Next this paper observes some key developments of SMS post-GFC. Finally, this paper concludes that the philosophy of the SMS has experienced substantial evolution post-GFC. Neo-liberal ideologies and the efficient markets hypothesis (EMH) is no longer considered as the conventional wisdom of securities market regulators. Accordingly, a new conceptual framework of market supervision is recommended. The twin-peak model is identified as the preferred model due to a wider view of systemic risk mitigation.