Global Capital Markets Center
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Private Ordering of Public Markets: The Rating Agency Paradox Steven L. Schwarcz Forthcoming University of Illinois Law Review (Issue #2, 2002) |
ABSTRACT:
Rating agencies profoundly impact the ordering of global financial markets. They are the universally feared gatekeepers for the issuance and trading of debt securities, and recent proposals by the Basle Committee on Banking Supervision promise to further expand their role internationally. Yet they remain largely unregulated private entities. This article examines whether rating agencies should remain unregulated and, if not, whether it is feasible for individual nations to regulate multinational entities of this type. Also, because rating agencies are representative of a growing trend toward private ordering of traditionally public functions, this article's analysis will be shown to have implications for private ordering by non-governmental organizations (NGOs) beyond rating agencies.
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