Self-Regulation Case

The first advantage that seems to be addressed to self-regulation is that, compared with the national regulation, it is less costly, since the burden of devising rules and policing compliance therewith is directly born by those regulated. For the same reason, as these rules are devised by those to whom they are to apply, they are likely to be also more effective. Moreover, because it draws on the relevant market participants' experience, expertise and superior knowledge of the regulatory issues at stake, it can be better informed, more focused and easier to adapt to new technological or economic developments.

Furthermore, still contrary to the so called "command and control" regulatory regimes, self regulation is deemed to be more responsive and fovorable to innovation.

In this view, it appears clear how self regulation can respond with greater flexibility to industry changes, whereas conventional external regulation could react more slowly to such innovations and making hard and longer for them their realization. In principle, therefore, self regulation should be better placed than conventional regulation to offer a comprehensive set of detailed and efficient standards of conduct, which are in line with financial innovations and apt to help shape the industry's conduct in detail, capturing the subtleties of the market activities in an attempt to foster the optimal degree of regulation and to induce best market practices.

As a matter of fact, self regulatory standards also differ from "command and control" rules in the way that the former identifies best practices, whereas the latter sets only minimum requirements.

Last but not least, self regulation is more apt to be cross border, compared to external regulation.

In the side of the costs of self regulation, two facts have to be taken into consideration.

First, government regulation