New Zealand Institute for the study of competition and regulation inc.

Abstract

A large body of evidence suggests that investor protection regulation
assists the development of major stock exchanges, but this leaves open
the question of whether or not the same level of regulation should be
applied to all centralised trading platforms. Allowing for regulatory
variation permits a wider choice of investment opportunities for liquidity conscious investors, lowers some firms' cost of capital, and enhances
platform competition, while potentially negative spillover mechanisms
lack both theoretical credibility and empirical support. Overall,
uniformity in investor protection regulation seems designed to provide an
expensive solution to a doubtful problem.