therefore, to strengthening the powers, resources, and independence of statutory regulators. IOSCO and other multilateral organizations, including the World Bank, have supported this effort by producing international standards and benchmarks in numerous areas. Market scandals have been another catalyst to strengthening government regulators, in response to pressure to increase standards of conduct in the markets. Government bodies have much broader jurisdiction and powers than SROs, and they are seen as stronger, more effective regulators.

- _Trend to consolidation of financial regulators:_ A global trend toward consolidation of financial regulators is another factor in reducing reliance on self-regulation. Some governments believe that regulation is more efficient if fewer government agencies, rather than multiple public and private agencies, carry it out on a centralized basis. Others argue that the system benefits from the checks and balances inherent in the involvement of SROs, exchanges, the industry, and the regulators in response to the issues, which improves the content of new initiatives.

_-_ A survey sponsored by the World Bank (de Luna Martinez and Rose 2003) found that even five years ago 46 countries had consolidated some financial regulatory supervision (although the scope of regulatory powers of those agencies varied significantly). In the most advanced form of consolidation, some countries have created universal financial regulators that extend to banking, insurance an other sectors, such as the UK’s Financial Services Authority.<sup>13</sup> The FSA supplanted a number of self-regulatory bodies, including the London Stock Exchange (LSE), which even lost its responsibility for listing rules.<sup>14</sup> The creation of a universal regulator does not necessarily mean the elimination of selfregulation, but its use is often reduced significantly in such cases, especially if a country aims to adopt the UK model. Other areas of the financial services industry, such as banking, do not share the securities industry’s tradition of self-regulation. Finally, major reforms such as creation of a new central agency invariably include expanding the power and authority of the statutory regulator.

- _“Cooperative regulation”_ : In some jurisdictions, the advent of a shared approach to regulatory policy and tasks between statutory regulators and SROs has increased the complexity of regulation and the amount of overlap between the two levels. Both statutory regulators and SROs are often active in the same areas. A World Federation of Exchanges (WFE 2005) survey on exchanges’ regulatory roles showed extensive use of cooperative or shared regulation instead of a clear division of responsibilities. The lack of a clear separation of roles often leads to unnecessary duplication and delays resulting from protracted discussion and debate on policy and initiatives.  It can also produce conflict, and even competition, over roles and policy. The greater the degree of coinvolvement in issues and initiatives, the more time that must be devoted to coordinating

> 13 As this paper was being finalized, the UK government announced reforms to the regulatory structure that would diminish the FSA’s role in favour of the Bank of England.

> 14 Arguably the LSE’s role as the “UK Listing Authority” responsible for clearing issuers for listing on an exchange became untenable once other exchanges began competing for listing.  However, the LSE also transferred administration of all listing rules and compliance functions to the FSA.  The large majority of exchanges retain these functions as part of their listing operations.

14