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Innovative Regulation through Competition: A Response to Rapidly Evolving Markets

Published online by Cambridge University Press:  26 May 2016

Ido Baum
Ido Baum*
Affiliation:
Vice Dean and Senior Lecturer, Haim Striks School of Law, College of Management Academic Studies (Israel). Parts of this article were developed during my term as Visiting Professor at the Georgetown Law Center for Transnational Legal Studies (CTLS). [email protected].
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Abstract

How can regulators keep up with sea changes in dynamic markets? This article proposes the use of competitive forces to generate innovative regulation. In markets where national, social, cultural, economic or other interests must be maintained in the face of evolving risks, heightened uncertainties and dynamic technological developments, regulators have to learn by doing.

This article proposes the novel concept of intra-regulatory competition (IRC), a powerful method for developing innovative regulatory solutions by staging a contest between different regulatory regimes imposed simultaneously on market participants in a given jurisdiction. The article describes the principles of and justifications for IRC, conditions for its effective implementation, its potential benefits and drawbacks. IRC is analysed against the backdrop of similar concepts such as randomised law, experimental law and inter-jurisdictional competition. Finally, the article argues that the regulation of media content in order to promote cultural pluralism and the regulation of computerised trading in securities and futures markets are fields that are ripe for and compatible with the application of IRC.

Keywords

media pluralismregulatory competitionregulationinnovation
Type
Articles
Information
Israel Law Review , Volume 49 , Issue 2 , July 2016 , pp. 197 - 236
Copyright
Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 2016 

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References

1 Jonathan Jones, The Lost Battles: Leonardo, Michelangelo, and the Artistic Duel that Defined the Renaissance (Simon & Schuster 2012). For a critical discussion on the role of competition in generating creativity see generally Margaret Heffernan, A Bigger Prize: How We Can Do Better than the Competition (PublicAffairs Books 2014).

2 By ‘regulation’ I mean ‘the intentional use of authority to affect behavior of a different party according to set standards, involving instruments of information gathering and behavior modification’: Robert Baldwin, Martin Cave and Martin Lodge, ‘Introduction: Regulation – The Field and the Developing Agenda’ in Robert Baldwin, Martin Cave and Martin Lodge (eds), The Oxford Handbook of Regulation (Oxford University Press 2010) 12, 12. For a slightly more intricate definition see Julia Black, ‘What is Regulatory Innovation?’ in Julia Black, Martin Lodge and Mark Thatcher (eds), Regulatory Innovation: A Comparative Analysis (Edward Elgar 2005) 1, 11 (‘the sustained and focused attempt to alter the behavior of others according to standards or goals with the intention of producing a broadly identified outcome or outcomes, which may involve mechanisms or standard-setting, information-gathering, and behavior-modification’). For another definition see Jurgen Feick and Raymund Werle, ‘Regulation of Cyberspace’ in Baldwin, Cave and Lodge (eds), ibid 523, 525 (broadly defining regulation as ‘the development and application of public or private rules directed at specific population targets’).

3 Black, ibid 3.

4 ibid 7 (‘innovations are enacted ideas; they are those which have made it through the political or organizational decision processes to implementation’).

5 The idea of injecting competitive components into the internal process of lawmaking and regulation is novel, although it follows and draws on the legal discourse regarding legal experimentation and inter-jurisdictional competition discussed below in Section 4.

6 Karen Hult, Agency Merger and Bureaucratic Redesign (University of Pittsburgh Press 1987) 5.

7 John W Kingdon, Agendas, Alternatives and Public Policies (2nd edn, Pearson 2014) 79–80.

8 Black (n 2) 9.

9 See Section 5 below.

10 Birkinshaw, Julian, ‘Strategies for Managing Internal Competition’ (2001) 44 California Management Review 21, 21–22CrossRefGoogle Scholar (internal competition increases flexibility, challenges the status quo and motivates greater effort); Scott Bowden, ‘Innovation Lessons from the Iron Dome’, Innovation Excellence, 28 July 2014, http://www.innovationexcellence.com/blog/2014/07/28/innovation-lessons-from-the-iron-dome (suggesting that companies should stay ahead of their competitors by setting up internal teams to develop innovations that will disrupt their own products).

11 Julia Black, ‘Tomorrow's Worlds: Frameworks for Understanding Regulatory Innovation’ in Black, Lodge and Thatcher (n 2) 16, 20. See also Heffernan (n 1) 30 (‘Genuine critical thinking and innovation require that the mind be allowed to wander, to try out answers that don't work, to test concepts and, crucially, to make mistakes’); Kingdon (n 7) 84 (suggesting ‘organized anarchies’ as means of producing innovative policy proposals); ibid 206 (some good regulation is inevitably the product of accident or dumb luck).

12 Kingdon (n 7) 116 (the generation of policy proposals ‘resembles a process of biological natural selection’).

13 Orbach, Barak, ‘What Is Government Failure?’ (2013) 30 Yale Journal on Regulation 44, 55–56Google Scholar (defining government failure as ‘substantial imperfection in government performance’ both in its action and as a result of inaction when the latter is required).

14 Monroe E Price, Media and Sovereignty: The Global Information Revolution and Its Challenges to State Power (The MIT Press 2002) 238 (‘Every country, even one committed to free speech principles, is engaged in some form of regulation or restriction relating to media’).

15 Baker, C Edwin, ‘The Media that Citizens Need’ (1998) 147 University of Pennsylvania Law Review 317Google Scholar.

16 IRC would be mostly valuable in fields characterised by rapid technological change and dynamic institutional evolution – eg, biotechnology, technology-driven network industries, big data and corporate finance: Black (n 11) 23.

17 See Section 7 below.

18 I will use the terms ‘subjects’ and ‘participants’ to describe the regulated actors within the market, and the term ‘contestants’ or ‘competitors’ to describe the competing regulating parties.

19 Applying IRC to markets with a small subject population has two drawbacks. The first is the difficulty of drawing conclusions on the basis of small samples. The second drawback stems from the fact that regulatory solutions that strive to build on competition between subjects may not be viable. Using the example in the text, it would not be possible to impose regulatory measures that build on competition between broadcasters if the IRC contestant is in charge of one broadcaster in a market comprising only two regulated entities.

20 See Section 7.2 below.

21 See generally Black (n 11) 21.

22 Such a case exists in the securities regulation and commodity futures regulation in the US: see Section 7 below. Another example is the regulation of commercial broadcasting in Israel: see n 169.

23 Gubler, Zachary J, ‘Experimental Rules’ (2014) 55 Boston College Law Review 129, 147Google Scholar; Roberta Romano, ‘Regulating in the Dark’, Yale Law & Economics Research Paper No 442, 30 March 2012, 6, http://ssrn.com/abstract=1974148 (arguing that agencies are most suitable for institutions in government to develop complex regulation).

24 Abramowicz, Michael, Ayres, Ian and Listokin, Yair, ‘Randomizing Law’ (2011) 159 University of Pennsylvania Law Review 929, 975Google Scholar (suggesting that mandatory participation will help in avoiding self-selection and attrition problems in experimental law, but conceding that some unavoidable attrition will always exist).

25 Robert Baldwin, Martin Cave and Martin Lodge, Understanding Regulation: Theory, Strategy and Practice (2nd edn, Oxford University Press 2012) 360–61 (observing that regulatory competition creates unstable regulation).

26 Abramowicz, Ayres and Listokin (n 24) 952–54.

27 See Section 4.1 below.

28 It is often argued that subjects have superior knowledge compared with regulators, certainly with regard to the particular effects of regulation on their own behaviour. If this is the case then indeed self-selection should be prohibited.

29 Another justification concerns the fact that in many cases market actors possess more information than the regulators about the particular implications that a regulatory regime will have on them. Hence, even if such private information is inconclusive and incomplete, it may still generate strategic behaviour that could result in bias in the desired process.

30 For a deeper discussion of equal treatment concerns, see Section 5.3 below.

31 A good example for this is the complex mandate often imposed on media regulators, discussed in Section 6.1.2. Sometimes regulatory mandates are simple in their policy goal but complicated to implement in reality. This seems to be the case with regard to securities regulation which simply strives to protect investors, but its implementation is highly sophisticated: see Section 7.2 below.

32 Abramowicz, Ayres and Listokin (n 24) 962 (‘policy makers should experiment with policies that have relatively positive expected effects’).

33 Romano (n 23) 19–21 (advocating that sunsetting processes are crafted to include evaluative criteria and that they are evaluated by independent experts, with adequate funding).

34 Baldwin, Cave and Lodge (n 25) 364. Conversely, the regulation of services such as financial gatekeepers is less suitable for IRC because of the invisibility of measures that yield successful error prevention.

35 Ben-Bassat, Avi, ‘Conflicts, Interest Groups and Politics in Structural Reforms’ (2011) 54 Journal of Law and Economics 937, 940–41Google Scholar (some reforms are implemented immediately but some take years).

36 The random assignment of regimes also reduces opposition: Aronson, Ori, ‘Forum by Coin Flip: A Random Allocation Model for Jurisdictional Overlap’ (2014) 45 Seton Hall Law Review 63, 80Google Scholar (randomisation sterilises the decision-making process by eliminating human discretion).

37 Gubler (n 23) 141.

38 Abramowicz, Ayres and Listokin (n 24) 956 (‘a temporary law may be a poor proxy for long-term effects because the law will have both dynamic and static effects’). On the other hand a lengthy process exacerbates the inequality and decreases the value of collected information as a result of spillover effects: ibid 978.

39 ibid 993 (arguing that an experimental repeal of the Sarbanes Oxley Act should be extended over a period of several years).

40 Gubler (n 23) 130 (supporting the use of sunset mechanisms in experimental laws with uncertain pay-offs).

41 There is evidence to support the assertion that competition between regulators advances regulatory vigour. Regulators are not always looking to expand their power and jurisdiction when they enjoy a de facto monopoly. As an anecdotal example, in 1974 the Securities and Exchange Commission (SEC) refused the offer by the US Congress to be given regulatory jurisdiction over the commodity futures markets: Benson, John D, ‘Ending the Turf Wars: Support for a CFTC/SEC Consolidation’ (1991) 36 Villanova Law Review 1175, 1175Google Scholar.

42 Gubler (n 23) 132 fn 16; Levine, Michael E, ‘Why Weren't the Airlines Reregulated?’ (2006) 23 Yale Journal on Regulation 269, 273Google Scholar; Kingdon (n 7) 123 (arguing that personal interests like keeping one's job, expanding one's agency, promoting one's career, as well as also promoting one's values are incentives to advocate proposals); cf Heffernan (n 1) 29 (arguing, in the context of stimulating learning in children, that tangible rewards crowd out intrinsic drive).

43 Stephen Breyer, Breaking the Vicious Circle: Toward Effective Risk Regulation (Harvard University Press 1993) 56.

44 Black (n 11) 20 (‘the conditions which are necessary for innovation are those which impede implementation’).

45 Robert Baldwin, ‘Better Regulation: The Search and the Struggle’ in Baldwin, Cave and Lodge (eds) (n 2) 259, 263 (discussing the OECD reports on better regulation).

46 ibid 260.

47 Baldwin, Cave and Lodge (n 25) 93.

48 ibid 83.

49 ibid 94.

50 For an argument regarding the impossibility of governing dynamic institutions with standard governance methods see Devins, Caryn and others, ‘Against Design’ (2015) 47 Arizona State Law Journal 609, 610–11Google Scholar (arguing that ‘governance must be considered in the light of creative dynamics’ because institutions change in unpredictable ways and therefore ‘it is impossible to ensure fairness by striking a one-time bargain from behind the Rawlsian veil of ignorance’).

51 Romano (n 23) 12 (‘Risk management in today's context of large and interconnected financial institutions and complex financial instruments must grapple with unknown and unknowable, and not simply known, risks’).

52 Alces, Kelli A, ‘Legal Diversification’ (2013) 113 Columbia Law Review 1977, 1980–81Google Scholar (defining legal diversification as the strategy of ‘building a portfolio of securities that are governed by a variety of legal rules’ for the purpose of protecting the investor against the risk that a particular jurisdiction's method of minimising agency costs will turn out to be ineffective).

53 Romano (n 23) 26 (regulatory experimentation and diversity are ‘safety valves’ against both dynamic regulatory environments and systemic errors).

54 Aronson (n 36) 98 (arguing that ‘institutional heterogeneity’ can infuse more information into political discourse and institutional design processes and is ‘often necessary means in any experimental process testing the utility of a novel policy idea’).

55 Gubler (n 23) 143; Aronson (n 36) 67 (‘Randomizing forum selection means that, over time and given a sequence of random allocations, similar questions and similar fact patterns will reach divergent forums and be treated differently, thus producing a pluralism of judicial output, as well as an information-generating dynamic reminiscent of randomized experiment methods’); Doremos, Holly, ‘Precaution, Science, and Learning While Doing in Natural Resource Management’ (2007) 82 Washington Law Review 547, 573Google Scholar.

56 On the other hand, see generally Bagley, Nicholas and Revesz, Richard L, ‘Centralized Oversight of the Regulatory State’ (2006) 106 Columbia Law Review 1260Google Scholar (there is no evidence that agencies generally over-regulate or under-regulate).

57 Susan E Dudley and Jerry Brito, Regulation: A Primer (2nd edn, George Mason University 2012) 61 (citing Stephen Breyer).

58 Baldwin, Cave and Lodge (n 25) 470–75 (discussing the importance of contestability).

59 Cento Veljanovski, ‘Economic Approaches to Regulation’ in Baldwin, Cave and Lodge (eds) (n 2) 17, 30–31 (favouring market-based solutions for market failures).

60 On the implementation of the legal initiative see US Federal Office of Science and Technology Policy, ‘Implementation of Federal Prize Authority: Fiscal Year 2013 Progress Report’, May 2014, https:// www.whitehouse.gov/sites/default/files/microsites/ostp/competes_prizesreport_fy13_final.pdf.

61 Cento Veljanovski, ‘Strategic Use of Regulation’ in Baldwin, Cave and Lodge (eds) (n 2) 87, 91–92.

62 This depends on whether parties can inexpensively escape their contractual obligations. If parties know that they will be strongly committed to their contractual obligations they will have an incentive to contemplate their potential private risks of the contract ex ante and to share this information with the other party: see discussion in Section 4.2 below.

63 Romano (n 23) 2 (‘Financial firms operate in a dynamic environment in which there are many unknowns and unknowables and state of the art knowledge quickly obsolesces’).

64 See generally Romano (n 23). For an example of the haphazard crisis-driven regulatory solutions to the 2008 financial crisis on Wall Street see James B Stewart, ‘Eight Days – The Battle to Save the American Financial System’ The New Yorker, 21 September 2009, http://www.newyorker.com/magazine/2009/09/21/eight-days?currentPage=all (indicating that some nationally crucial regulatory decisions were based on scant information and gut feelings).

65 Romano (n 23) 4.

66 Hult (n 6) 4.

67 Romano (n 23) 3.

68 Baldwin, Cave and Lodge (n 25) 101.

69 See Section 4.2 below.

70 Resources may be wasted in the race to register the patent but the research race in and of itself is not necessarily wasteful.

71 See generally Abramowicz, Ayres and Listokin (n 24); Gubler (n 23) 129.

72 Romano (n 23) 29.

73 ibid 14–15 (favouring the use of sunsetting for regulation under conditions of uncertainty because it ‘loosens the institutional stickiness’ and enables the incorporation of post-enactment information).

74 Abramowicz, Ayres and Listokin (n 24) 931 (‘regression analysis of policy is often fraught with complications’).

75 Gubler (n 23) 131 (observing that less than 1% of the laws are experimental in nature).

76 ibid 132.

77 The media market is a case in point, where existing linear broadcasters found themselves bound to national regulation whereas new non-linear web broadcasters were free from this regulation while providing similar content. The Israeli case serves as a representative example: Ido Baum, Media Law in Israel (Kluwer 2014) 35 (‘The existing regulation of audio-visual content does not apply to online broadcasting’); Feick and Werle (n 2) 534 (discussing the challenge posed by the internet to traditional legal forms of regulation).

78 Romano (n 23) 26–27.

79 Abramowicz, Ayres and Listokin (n 24) 948–51 (‘In randomized tests on laws and public information, it will be harder to keep subjects in the dark about how they are being treated or the fact they are subjects in an experiment’).

80 ibid 974 (‘the sample should be large enough to generate meaningful results’) but cf Romano (n 23) 28 (supporting randomised regulatory experiments but only on a small scale).

81 In that sense IRC operates much like intellectual property rights regimes that deal with the production of knowledge or information: see generally Stiglitz, Joseph E, ‘Economic Foundations of Intellectual Property Rights’ (2008) 57 Duke Law Journal 1693Google Scholar.

82 Assuming there is no intellectual property protection for innovative regulatory regimes, cumulative innovation is maximised by the IRC process. However, from an incentive point of view, it would be useful to reward IRC competitors that did not develop the prevailing regime if the knowledge they produce turns out to be meaningful in improving the prevailing regulation. On the cumulative nature of innovation regimes and the importance of cumulative innovation to the creation of knowledge see Scotchmer, Suzanne, ‘Standing on the Shoulders of Giants: Cumulative Research and the Patent Law’ (1991) 5(1) The Journal of Economic Perspectives 29Google Scholar; Peter Menell and Suzanne Scotchmer, ‘Intellectual Property’ in A Mitchell Polinsky and Steven Shavell (eds), Handbook of Law and Economics (Elsevier 2007) 1473.

83 Abramowicz, Ayres and Listokin (n 24) 947 (‘Federalism may be more conducive to experimentation than the alternatives’).

84 Gibbons, Thomas, ‘The Impact of Regulatory Competition on Measures to Promote Pluralism and Cultural Diversity in the Audiovisual Sector’ (2006) 9 Cambridge Yearbook on European Legal Studies 239, 240Google Scholar.

85 This perception is an offspring of the famous metaphor of federal states as laboratories of democracy, attributed to the dissenting opinion of Justice Louis Brandeis in New State Ice Co v Liebmann 285 US 262 (1932) 311 (‘It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country’). Notably, Justice Brandeis realised that experimentation of the sort discussed here is risky in nature and requires courage on the part of those undertaking it. IRC might be riskier than Brandeis's conception of experimentation because IRC does not compartmentalise the risks to one state; thus, IRC should be applied restrictively.

86 Garicano, Luis and Lastra, Rosa M, ‘Towards a New Architecture for Financial Stability: Seven Principles’ (2010) 13 Journal of International Economic Law 597Google Scholar (arguing in favour of integrated supervision of financial markets, securities, banking and insurance, because synergy and coordination are more important than creativity and innovation).

87 Baldwin, Cave and Lodge (n 25) 356 (‘Regulatory competition involves the competitive adjustment of regulatory regimes in order to secure some advantage’).

88 For a definition of regulatory arbitrage and an explanation of how this phenomenon undermines the rule of law see generally Victor Fleischer, ‘Regulatory Arbitrage’, Colorado Legal Studies Research Paper No 10–11, 4 March 2010, 2.

89 Baldwin, Cave and Lodge (n 25) 359.

90 ibid 357–66; Mathis Koenig-Archibugi, ‘Global Regulation’ in Baldwin, Cave and Lodge (eds) (n 2) 407, 414 (the empirical evidence to support the hypothesis that international competition creates a race to the bottom is scarce); Cary, William L, ‘Federalism and Corporate Law: Reflections upon Delaware’ (1974) 83 Yale Law Journal 663Google Scholar (federalism creates a race to the top), and its progeny, eg, Romano, Roberta, ‘Empowering Investors: A Market Approach to Securities Regulation’ (1998) 107 Yale Law Journal 2359Google Scholar. For an example of the opposing view see Bebchuk, Lucian Arye and Ferrell, Allen, ‘Federalism and Corporate Law: The Race to Protect Managers from Takeovers’ (1999) 99 Columbia Law Review 1168CrossRefGoogle Scholar (federalism creates a race to the bottom from the shareholders’ perspective); cf Bratton, William W, ‘Corporate Law's Race to Nowhere in Particular’ (1994) 44 University of Toronto Law Journal 401Google Scholar.

91 Murphy, Dale D, ‘Interjurisdictional Competition and Regulatory Advantage’ (2005) 8(4) Journal of International Economic Law 891CrossRefGoogle Scholar; Gibbons (n 84) 241–42.

92 The distinction between the possible manifestation of dissatisfaction and responses to deterioration traces back to the seminal work of Albert O Hirschman, Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States (Harvard University Press 1970).

93 Abramowicz, Ayres and Listokin (n 24) 946.

94 ibid. See also the discussion in Section 6.1 below.

95 Black (n 2) 13–14.

96 Gubler (n 23) 148.

97 ibid 149; Kingdon (n 7) 31 (‘Through feedback from the operation of programs, however, implementation can lead to innovation’).

98 Birkinshaw (n 10) 21.

99 Markham, Jerry W, ‘Merging the SEC and CFTC-A Clash of Cultures’ (2009) 78 University of Cincinnati Law Review 537, 587Google Scholar (‘Combining failure with failure does not seem like a formula for success’).

100 For an argument in favour of duplicity and even multiplicity in institutional design see Mariana Mota Prado and Lindsey Carson, ‘Brazilian Anti-Corruption Legislation and its Enforcement: Potential Lessons for Institutional Design’, IRIBA Working Paper 09, July 2014 (arguing that the multiplicity of institutional entities dealing with corruption in Brazil has strengthened the collective impact on the regulated field).

101 For the common argument that transition relief waters down the objection to reform see Revesz, Richard L and Westfahl-Kong, Allison L, ‘Regulatory Change and Optimal Transition Relief’ (2011) 105 Northwestern University Law Review 1581, 1623Google Scholar. The authors also offer a critique of this position: ibid 1626–29. However, the compensation payments I propose go beyond mere transition relief. They are fairness driven. In fact, equalisation may be in kind and not monetary. For example, if the result of IRC is that the subjects of one regulatory competitor end up in a dominant market position compared with the subjects of the other competitor, it might be insufficient to provide monetary relief. A possible solution would be to redivide the market between the subjects after the prevailing regulation is put into place. Such a solution may eventually cause the subjects to agree on the accurate equalisation payments. The reason for this can be explained by the following example. Assume two regulators compete on regulation, with each competitor regulating one subject in the market. The two subjects are companies that cater for all the clients in the market and at the beginning of the process they split the clients in the market evenly. In the IRC process, the first regulator wins. The subject regulated by the first regulator garnered 80% of the market during the IRC process while the other company lost 30% of its market share. Assuming that the change in market domination is the result of different regulatory regimes, it might be easier for a regulator to reallocate the clients evenly than to calculate the compensation for the changed market structure. In fact, this method of equalising the market is likely to induce the dominant company to negotiate with the other company for contractual payments in return for remaining with its dominant position. This would yield mutually agreeable compensation. If reallocating clients is not an option (because the clients may object) another form of equalisation could be ordering the dominant company to transfer the relevant share of revenues to the competitor for a predetermined period of time.

102 Indeed, compensation payments should take into account not only direct foregone profits but also loss of market share.

103 See, for example, the argument that the jurisdictional division between the SEC and the Commodity Futures Trading Commission (CFTC) has stifled the development of financial instruments such as Index Participation Certificates: Benson (n 41) 1207.

104 For example, imagine that a new type of futures contract is developed in a securities market.

105 Note that this welfare loss can be prevented entirely if the regulated entity that may not use its market innovations sells that innovation to a competing regulated entity which is the subject of another regulatory regime under which the innovation is permissible. However, such a sale should be forbidden during the IRC process because the sale captures some of the future profits from the innovation; the selling entity would thereby be migrating de facto from its regulatory regime to the competing regime and breaking the no-exit rule.

106 Cortez, Nathan, ‘Regulating Disruptive Innovation’ (2014) 29 Berkeley Technology Law Review 175Google Scholar (arguing that agencies need not be overly cautious and tentative with innovations and should favour experimentation when there is concern for premature or erroneous regulation).

107 Livermore, Michael A, ‘Cause or Cure? Cost–Benefit Analysis and Regulatory Gridlock’ (2008) 17 New York University Environmental Law Journal 107Google Scholar (‘When agencies fail to address a pressing environmental problem, this inaction – though it can be just as costly, in economic terms, as inefficient regulation – is not subjected to cost–benefit scrutiny’); Sunstein, Cass R, ‘Paradoxes of the Regulatory State’ (1990) 57 University of Chicago Law Review 407Google Scholar (inefficient or captured regulators damage social welfare as much as costly regulation does).

108 Stewart, Richard B, ‘Regulation, Innovation, and Administrative Law: A Conceptual Framework’ (1981) 69 California Law Review 1256, 1261Google Scholar (concluding that ‘productivity problems do not justify abandoning environmental, health, and safety goals’, but supporting modification or replacement of regulatory tools ‘in order to reduce adverse impacts on market innovation and to provide incentives for social innovation’). Furthermore, the assumption that regulation stifles innovation is simply untrue: see generally Jacques Pelkmans and Andrea Renda, ‘Does EU Regulation Hinder or Stimulate Innovation?’, IRMO Occasional Papers, 1/2015 (arguing that ‘regulation can at times be a powerful stimulus to innovation’, particularly when it is less prescriptive, more flexible and is characterised by lower compliance and red-tape burdens).

109 Black (n 2) 4–5.

110 Baldwin, Cave and Lodge (n 25) 97–98.

111 Abramowicz, Ayres and Listokin (n 24) 931.

112 ibid 972 (admitting that courts tend to treat randomised experimental law with antipathy).

113 Aronson (n 36) 91 (randomisation guarantees initial distributive equality because regimes are imposed regardless of the power, size or strength of the subjects); Abramowicz, Ayres and Listokin (n 24) 968–69 (arguing that both legal precedent and philosophical analysis do not prevent randomised experimentation with laws).

114 Aronson (n 36) 83–88 (exemplifying the use of randomness in the allocation of indivisible resources, and in the process of case allocation and panel assignment in courts).

115 ibid 88 (‘Randomness in the judicial decision is shunned, whereas randomness in judicial administration is allowed. The judge may not flip a coin, but the court registrar may certainly do so’).

116 ibid 97–99. For a discussion of the ‘arbitrary and capricious’ judicial review standard in the case of regulation and the proposition that experimental law can pass such a standard, see Gubler (n 23) 133–34.

117 ibid 143 (suggesting that judicial review can act as a check to ensure learning is incorporated into the final regulation).

118 Gubler (n 23) 144.

119 ibid 139.

120 Black (n 11) 21 (‘Innovations are likely to be opposed’).

121 Mark Thatcher, ‘Sale of the Century: 3G Mobile Phone Licensing in Europe’ in Black, Lodge and Thatcher (n 2) 92, 92–93 (noting that regulatory innovation can help to reshape interest group dominance).

122 Gubler (n 23) 139–40 (warning that network effect entrenchment and resistance by interested parties impede the success of experimental law).

123 Abramowicz, Ayres and Listokin (n 24) 957–59.

124 ibid 960.

125 Note that the term ‘media pluralism’ is quite obscure: Valcke, Peggy, ‘Looking for the User in Media Pluralism Regulation: Unraveling the Traditional Diversity Chain and Recent Trends of User Empowerment in European Media Regulation’ (2011) 1 Journal of Information Policy 287, 288CrossRefGoogle Scholar (no clear definition of media pluralism.)

126 Diversity and pluralism replaced scarcity as the modern rationale for media regulation: Hettich, Peter, ‘YouTube to be Regulated? The FCC Sits Tight, While European Broadcast Regulators Make the Grab for the Internet’ (2008) 82 St John's Law Review 1447, 1451Google Scholar (‘In particular, diversity and localism form the guiding principles for the FCC's policy making in broadcasting’). The notion that audiovisual broadcasts have a significant impact on the formation of national cultural identity, social cohesion and pluralism can be found in almost all national or supranational legislation regarding the role of the media, and applies to public and private audiovisual media. For example, the Canadian Broadcasting Act 1958 was enacted as a result of the fear of ‘Americanization’ of the Canadian domestic culture: Coffey, Colin J, ‘Foreign Investment in Cable Television: The United States and Canada’ (1983) 6 Hastings International and Comparative Law Review 399, 417Google Scholar. In the European Union (EU), the Treaty on the Functioning of the European Union ((entered into force 13 December 2007) [2008] OJ C 115/47), art 167, makes cultural diversity an intrinsic value of the Union by stating that ‘[t]he Union shall contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore’. Directive 2010/13/EU of 10 March 2010 on the Coordination of Certain Provisions laid down by Law, Regulation or Administrative Action in Member States concerning the Provision of Audiovisual Media Services (Audio Visual Media Services Directive) [2010] OJ L 95/1, Ch VI, sets production and distribution quotas regarding European media content in order to guarantee the production and broadcast of local content with particular regard to local cultural aspects. Similar mandates can be found in the laws that govern the role of media regulators in numerous countries. In Israel, for example, the Israeli Broadcasting Association Law 1965, art 3, requires the public broadcaster to reflect ‘all the components of Israeli society’: Baum (n 77) 82. Private national broadcasters in Israel are also mandated by law to promote ‘cultural pluralism’: ibid 106. In Croatia, the Electronic Media Act 2009, art 9, which regulates private broadcasters, states that providing audiovisual and radio programmes shall be in the interest of the Republic of Croatia ‘when programmes relate to … exercising the rights to public information and to keeping all citizens of the Republic of Croatia and members of Croatian national minorities and communities abroad informed and to exercising the rights of national minorities within the Republic of Croatia … the preservation of the Croatian national and cultural identity’. The Greek Constitution, art 15(2), mandates the regulators of broadcasting services in the country to promote its cultural development through regulation of the quality of programming. In Spain, regional councils are entrusted with the role of promoting cultural diversity by local broadcasters: Laura Bergez Saura and Nuria Ruguero Jimenez, ‘Spain’ in Helena Sousa and others (eds), Media Regulators in Europe: A Cross-Country Comparative Analysis (University of Minho, Portugal 2013) 146, 154.

127 Baldwin, Cave and Lodge (n 25) 7.

128 Hettich (n 126) 1461 (observing that any shortfall in the production of domestic cultural content is compensated by foreign content as a result of global market forces); Goodman, Ellen P, ‘Media Policy Out of the Box: Content Abundance, Attention Scarcity, and the Failures of Digital Markets’ (2004) 19 Berkeley Technology Law Journal 1389, 1455Google Scholar (arguing that even if media catered for what consumers want, it would not necessarily supply the content needed for a diversified civil democratic society); C Edwin Baker, Media Concentration and Democracy: Why Ownership Matters (Cambridge University Press 2007) 31 (‘… the market normally will not adequately produce and distribute the educational, political and cultural media products responsive to real preferences or needs of some portions of the population, especially of the poor but sometimes also of other demographic minorities or groups not valued by advertisers’). Arguably, a combination of low technological barriers to entry, free cross-border flow of information and a plethora of media sources can help to dismantle the media domination of existing political power structures that are being currently reinforced by the national cultural media policy. This was the promise of the internet. The discussion regarding the validity and viability of this argument is beyond the scope of this article. However, for a sceptical view of the internet's promise, cf Andrea Calderaro and Alina Dobreva, ‘Framing and Measuring Media Pluralism and Media Freedom across Social and Political Contexts’ in European Union Competencies in Respect of Media Pluralism and Media Freedom (Robert Schuman Centre for Advanced Studies and Centre for Media Pluralism and Media Freedom 2013) 16 (doubting the expectations that new media will be the panacea for lack of pluralism in current media platforms).

129 Price (n 14) 33; Nyman-Metcalf, Katrin, ‘Legislative Drafting Challenges in Communications Regulation: Convergence, Globalization and New Media Culture’ (2013) 2 International Journal of Legislative Drafting and Law Reform 313, 314Google Scholar (observing that media regulation requires very rapid changes and adaptation to technology).

130 There is growing evidence that national courts, regulators and lawmakers, even in democratic countries, find ways to influence the local manifestation of content disseminated by foreign content suppliers on the internet: Jack Goldsmith and Tim Wu, Who Controls the Internet? Illusions of a Borderless World (2nd edn, Oxford University Press 2008) 149–50 (arguing that enforcement of national laws is one of the reasons for the transformation of the global internet network into a ‘collection of nation-state networks’). However, the effects of domestic law on foreign content suppliers is much less predictable than the effect that domestic law had on domestic providers of content before the existence of the web. For an argument that globalisation has narrowed the effective powers of national agencies see, for example, Barak-Erez, Daphne and Perez, Oren, ‘Whose Administrative Law Is It Anyway? How Global Norms Reshape the Administrative State’ (2013) 46 Cornell International Law Journal 455, 460Google Scholar (‘as a result of globalization processes, the state has lost its exclusive power to regulate matters that lie within the traditional realm of administrative law’).

131 For example, the recognition of freedom of speech in the European Convention for the Protection of Human Rights and Fundamental Freedoms (entered into force 3 September 1953) 213 UNTS 222 (ECHR), art 10, and the relatively open standards set by the Audio Visual Media Services Directive (n 126). See also Colin Scott, ‘Between the Old and the New: Innovation in the Regulation of Internet Gambling’ in Black, Lodge and Thatcher (n 2) 114, 115 (observing that ‘the interjurisdictional dimension to the internet is a key part of the policy problem … the global world of interaction between governments, regulatory and policy entrepreneurs at the international level has only a limited role which is rarely decisive in shaping policy change’). Cf Price (n 14) 3 (arguing that the regulation of the market for speech is shifting from inward-looking state control to outward-looking multilateral approaches based on negotiation and agreement).

132 Feick and Werle (n 2) 524 (arguing that the question is not ‘whether Cyberspace can be regulated’ but pointing out that ‘it also makes regulation (especially national regulation) by public authorities increasingly difficult or even ineffective, and futile’); cf Price (n 14) 28 (‘those who ring the death knell of the state may ring too soon’).

133 Feick and Werle (n 2) 541 (‘border-crossing internet activities are difficult and sometimes impossible to regulate’).

134 ibid 542 (content regulation on the internet as an example of a ‘rapidly changing technological environment’, which means a ‘continuous flux’ of changing regulatory approaches with ‘no model being superior to any other’); Gibbons (n 84) 239–40 (‘In the light of the emerging dominance of (largely US based) global communications companies, the question remains whether it will be possible for states to pursue media policies that will enable and protect the emergence of a diversity of national, regional and local identities’).

135 For a critical view of the ideology of choice see generally Renata Salecl, The Tyranny of Choice (Profile Books 2010) (claiming that it is misleading to argue that individual choice can contribute to social change); Gibbons (n 84) 240 (multiplicity of channels may indicate ‘superficial pluralism’).

136 Price (n 14) 26 (media has a prominent role in national consensus building and ‘[g]lobalization means that the cultural bonds and loyalties that seemed once to be within the control of the state are now less so’). The regulation of communications is a critical element in the formation of the ‘market for loyalties’ within which national identity and a sense of community are formed: ibid 31; Nyman-Metcalf (n 129) 313 (‘Media has a recognized role in building national identity’).

137 See generally d'Halluin, Yann, Forsyth, Peter A and Vetzal, Kenneth R, ‘Managing Capacity for Telecommunications Networks under Uncertainty’ (2002) 10 IEEE-ACM Transactions on Networking, 579Google Scholar (uncertainty will delay investment in telecommunications infrastructure).

138 Deffains, Bruno and Obidzinski, Marie, ‘Real Options Theory for Law Makers’ (2009) 75 Recherches Economiques de Louvain [Louvain Economic Review] 93Google Scholar (arguing that laws and regulations tend to obsolesce quickly in the telecommunications industry, and therefore they should be enacted sooner rather than later in order to make more of a difference).

139 Alces (n 52) and accompanying text.

140 Gibbons (n 84) 245.

141 See n 150.

142 Feick and Werle (n 2) 526; Baker (n 15) 384 (different parts of the media may require different types of regulation). A compelling historical example of states defending themselves against influential foreign content by employing a technological separation ‘wall’ is the Eastern European Bloc's choice of SECAM technology for colour television as opposed to the PAL technology more common in the West: Price (n 14) 85.

143 Peter Alexiadis and Martin Cave, ‘Regulation and Competition Law in Telecommunications and Other Network Industries’ in Baldwin, Cave and Lodge (eds) (n 2) 500, 503 (technological convergence and economies of scope play a significant role in the telecommunications and media industries).

144 Feick and Werle (n 2) 540–41.

145 Gibbons (n 84) 244; Ciaglia, Antonio, ‘Pluralism of the System, Pluralism in the System: Assessing the Nature of Media Diversity in Two European Countries’ (2013) 75(4) International Communications Gazette 410Google Scholar (‘although nearly all of the main European TV networks rely on a public-private structure, significant differences arise in how this structure takes shape and in the policy outcomes according to the context’).

146 Valcke, Peggy, ‘A European Risk Barometer for Media Pluralism: Why Assess Damage When You Can Map Risk?’ (2011) 1 Journal of Information Policy 185, 185–86CrossRefGoogle Scholar (‘While there is broad consensus in Europe about the importance of media pluralism for democracy and identity formation, there are still widely diverging views on how to regulate the matter’).

147 Black (n 11) 27 (‘The usual hypothesis is that states emulate each other's policies’).

148 Gubler (n 23) 149–53.

149 Price (n 14) 66–67 (arguing that some parts of media law are ‘specifically local and tied, deeply, to their context’ while other elements can be transplanted); Baum, Ido, ‘Legal Transplants v. Transnational Law: Lessons from the Israeli Adoption of Public Factors in Forum Non Conveniens’ (2015) 40 Brooklyn Journal of International Law 358Google Scholar.

150 Feick and Werle (n 2) 533; Alexiadis and Cave (n 143) 500 (‘The regulation of network industries thus involves the pursuit of both economic and social objectives’). See also Goldsmith and Wu (n 130) 150–51. An often discussed example of cultural discrepancies which translate into national regulation challenges is harmful content, eg, obscene content or hate speech. The European Audio Visual Media Services Directive (n 126) art 27 imposes a prohibition on harmful content in linear broadcasting but no such prohibition exists with regard to non-linear (‘on demand’) services. It is also almost impossible to apply the EU standard of harmful content to all foreign broadcasters that have varying standards, particularly if they broadcast over the internet. Similar challenges arise in the regulation of hate speech, in spite of the fact that hate speech prohibitions have been agreed in the global arena in international conventions: see International Convention on the Elimination of All Forms of Racial Discrimination (entered into force 4 January 1969) 660 UNTS 195, art 20(b), and International Covenant on Civil and Political Rights (entered into force 23 March 1976) 999 UNTS 171, art 4(a). See generally Rosenfeld, Michel, ‘Hate Speech in Constitutional Jurisprudence: A Constitutional Analysis’ (2002) 24 Cardozo Law Review 1523Google Scholar. For an interesting example of cultural differences having a potential impact on public opinion, contrast the US media's aversion to showing graphic images of war with the tendency to show such images in channels emanating from Arab countries: Conor Friedersdorf, ‘What's with the US Media's Aversion to Graphic Images?’ The Atlantic, 19 June 2013, http://www.theatlantic.com/magazine/archive/2013/07/the-gutless-press/309405; Jeff Harrison, ‘Americans Turn to Al-Jazeera for Raw Images of War, UA Study Finds’, University of Arizona, College of Social and Behavioral Sciences, 18 April 2010, http://web.sbs.arizona.edu/college/news/americans-turn-al-jazeera-raw-images-war-ua-study-finds. The impact of the manifestation of cultural values of this sort and others is further aggravated by the fact that audiovisual content can now cross borders unintentionally. That is, the content is available for viewing and redistribution in foreign countries even without deliberate cross-border dissemination by its producers. This reshuffles the deck for any policy aimed at producing a particular diversification of content to promote a unique democratic balance, as purported by Professor Baker in his seminal article: Baker (n 15) 317.

151 Feick and Werle (n 2) 525 (given the rapid commercial and social usage patterns of the internet, there is no sense in searching for ‘a unitary regulatory model operating in Cyberspace’).

152 Gibbons (n 84) 249–52.

153 Puppis, Manuel, ‘Media Regulation in Small States’ (2009) 71 International Communications Gazette 7, 11Google Scholar.

154 ibid 8 (defining small countries as countries with a population of 100,000 to 18 million citizens, excluding microstates like Monaco, the Vatican and Andorra). Note that even very large countries like Canada may exhibit problems similar to those of small countries if they are exposed to the economic influence of a significantly larger country, such as the US in the Canadian case: ibid.

155 Puppis, Manuel and others, ‘The European and Global Dimension: Taking Small Media Systems Research to the Next Level’ (2009) 71 International Communications Gazette 105, 106Google Scholar (‘small states not only share structural peculiarities but also feature different political and historic traditions. Hence, despite their similarities, small states react differently to their environment’).

156 Puppis (n 153) 9–11, 13–15 (arguing that small countries tend to adopt an interventionist approach to content regulation, such as quota regulation, even if this approach undermines the international competitiveness of the national media). Even in larger countries intrusive tools are legitimised in the context of cultural content regulation: Hettich (n 126) 1463.

157 Baldwin, Cave and Lodge (n 25) 367 (noting that low environmental regulation in one state will cause an externalisation to a neighbouring state and affect its environment, even if the latter has strong environmental regulation. In the field of environmental regulation one can envisage a global agreement because all states may agree on the need to reduce pollution, but in the regulation of cultural pluralism such a solution is less likely because each state is interested in preserving a unique culture in its media content: see n 149.

158 Gibbons (n 84) 255 (smaller states feel more vulnerable).

159 Puppis (n 153) 12.

160 On the preference for imitation over innovation see, for example, Bechtold, Stefan, ‘The Fashion of TV Show Formats’ (2013) Michigan State Law Review 451, 456–57Google Scholar (noting that most TV programme formats originate in the US and observing that even the concept of developing and trading formats is an Anglo-American invention).

161 Chalaby, Jean K, ‘American Cultural Primacy in a New Media Order’ (2006) 68(1) International Communications Gazette 33Google Scholar (arguing that, even in the age of transnational and multichannel television, US broadcasters maintain and even increase their global prominence); Philip Schlesinger, ‘Tensions in the Construction of European Media Policies’ in Nancy Morris and Silvio Waisbord (eds), Media and Globalization: Why the State Matters (Rowman & Littlefield 2001) 95, 105–06 (arguing that the European audiovisual media policy has almost always been driven – officially – by the fear of Americanisation). For a more intricate view of the interdependencies of US regulation of free speech in a world of transnational information flows see Zick, Timothy, ‘Territoriality and the First Amendment: Free Speech at – and Beyond – Our Borders’ (2010) 85 Notre Dame Law Review 1543Google Scholar.

162 Price (n 14) 40 (arguing that, in the media, commercialisation may undermine historic cultures), and ibid 190 (Western programming is message-laden with ideas of free trade). The phenomenon of capitalistic ideology domination is not unique to the field of media; it manifests itself in other fields of regulation, though sometimes in less obvious ways: Barak-Erez and Perez (n 130) 483 (‘The norms of this evolving system of global general administrative law are not ideologically neutral. They are driven … by a neo-liberal, capitalist vision. This ideological dimension is problematic mainly because it remains concealed behind a discourse of rationality and objectivity’).

163 Puppis (n 153) 9.

164 Breeman, JM, Breeman, VE and Helberger, Natali, ‘On the Regulator's Plate: Exposure Diversity in a Changing Media Environment – Workshop Report and Highlights of an Expert Discussion’ (2011) 1 Journal of Information Policy 370, 371–72CrossRefGoogle Scholar.

165 Helberger, Natali, ‘Diversity Label: Exploring the Potential and Limits of a Transparency Approach to Media Diversity’ (2011) 1 Journal of Information Policy 337, 338CrossRefGoogle Scholar (‘A growing body of research demonstrates that the diversity that is being broadcast is not the diversity that is being consumed in people's homes’).

166 The referee/meta-regulator could be a committee of experts rather than an individual.

167 Helberger (n 165) 337–69 (arguing that ‘the challenge is no longer facilitating content, but capturing attention, which is not subject to regulatory control’); cf Valcke (n 125) 287 (observing that there is no general consensus on the appropriate method to measure exposure diversity, nor about its role and impact on content diversity’).

168 Audio Visual Media Services Directive (n 126), Ch I, art 1(a)(i).

169 Israel is a unique case of two media regulators with identical goals regulating different segments of the audiovisual media market. Multichannel television, such as cable and satellite television, are regulated by one regulatory authority and commercial terrestrial broadcasters are regulated by another regulatory authority, each of which is empowered by its own separate legislation. This separation seems to have generated informal regulatory competition, particularly observable in the regulation of product placement (the rules governing integration of commercial content in programmes). For a review of this unique case see Baum (n 77) 165–71.

170 Price (n 14) 143 (‘Inconsistency in the law of standards leads to lower investment in programming, more caution and less diversity’).

171 Gibbons (n 84) 254 (‘It is likely to be the total media environment, rather than laxity or stringency in regulatory standards, which explains media firms’ choices about location’).

172 Case C-148/91, Vereneging Veronica Omroep Organisatie v Commissariat voor de Media [1993] ECR I-487; Case C-23/93, TV10 v Commissariat voor de Media [1994] ECR I-4795.

173 Case C-11/95, Commission v Belgium [1996] ECR I-4117; Case C-56/96, VT4 v Vlaamse Gemeenschap [1997] ECR I-3143. See also Gibbons (n 84) 254.

174 This might not be an easy task. Current research strives to collect empirical data for the development of a European media pluralism policy. At the moment this work focuses on monitoring the market rather than proposing regulatory solutions. This work indicates that measuring media pluralism is beyond the infancy stage whereas developing policy and regulatory tools for promoting media pluralism is still a dynamic challenge: Valcke, Peggy and others, ‘The European Media Pluralism Monitor: Bridging Law, Economics and Media Studies as a First Step Towards Risk-Based Regulation in Media Markets’ (2010) 2 Journal of Media Law 85CrossRefGoogle Scholar.

175 Abramowicz, Ayres and Listokin (n 24) 962 (‘policy makers should experiment with policies that have relatively positive expected effects’).

176 See nn 90–91 and accompanying text.

177 Markham (n 99) 610 (‘Functional regulation is a failure. It is broken beyond repair and should be abandoned. The Enron-era scandals, subprime crisis, and Madoff scandal evidence its failure’).

178 Lin, Tom CW, ‘Reasonable Investor(s)’ (2015) 95 Boston University Law Review 461, 473Google Scholar (‘high-frequency investors, for instance, frequently hold positions measured in fractions of seconds without any regard for the fundamentals underlying the businesses of their positions’). Perhaps the regulatory need for more information about computerised trading, how it transpires and how it should be regulated is best exemplified by the use of the term ‘black box’ to describe this kind of trading activity: Black Box Model, Investopedia, http://www.investopedia.com/terms/b/blackbox.asp.

179 Lin (n 178) 489 (observing that ‘in recent years, high-frequency trading accounted for about thirty percent of all foreign exchange transactions, sixty percent of US equity trading, and forty percent of European equity trading’); Fleckner, Andreas M and Hopt, Klaus J, ‘Stock Exchange Law: Concept, History, Challenges’ (2013) 7 Virginia Law & Business Review 513, 556–58Google Scholar (asserting that algorithm-based trading has a tremendous impact on trading yet it may conflict with the principles of securities laws in more than one way).

180 Lin (n 178) 489–91.

181 ibid 480 (‘In reality, financial regulations designed for a homogeneous population of reasonable investors has frequently been ill suited for protecting a diverse population of real investors’).

182 Lin, Tom CW, ‘The New Investor’ (2013) 60 UCLA Law Review 678, 703Google Scholar (‘The enhanced speed and interconnectedness of cyborg finance makes it more endogenously vulnerable to volatile crashes, and the heavy reliance on machines makes the system more exogenously vulnerable to cyber perils’).

183 Graham Bowley, ‘Dow Falls 1,000, Then Rebounds, Shaking Market’, The New York Times, 7 May 2010. The event was subsequently studied and analysed by a joint committee of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchance Commission (SEC): CFTC and SEC, ‘Findings Regarding the Market Events of May 6, 2010’ (2010) (CFTC/SEC Inquiry), http://www.sec.gov/news/studies/2010/marketevents-report.pdf; see also Lin, ibid 704–05.

184 CFTC/SEC Inquiry, ibid 7; Lin (n 182) 705 (referring to circuit breaker programmes as ‘speed bumps’ during periods of extreme volatility, and describing additional measures suggested by regulators to prevent future flash crashes).

185 There are many inconclusive explanations. Andrei A Kirilenko and others, ‘The Flash Crash: The Impact of High Frequency Trading on an Electronic Market’, 28 December 2015, http://ssrn.com/abstract=1686004 (high frequency trading exacerbated the Flash Crash of 2010 but it was not the cause); CFTC/SEC Inquiry (n 183) 6 (same view); but more recently US authorities have alleged that the Flash Crash was the result of illegal trading activity by a single trader, Navinder Singh Sarao, operating from his home near London: Nathaniel and Jenny Anderson, ‘Trader Arrested in Manipulation that Contributed to 2010 “Flash Crash”’, The New York Times, 21 April 2015.

186 Lin (n 182) 705–06 (noting crashes in 2010, 2011 and 2012, and observing that none of the post May 6 flash crash events had the magnitude of the first crash); ‘Singapore Exchange Regulators Change Rules Following Crash’, Singapore News.Net, 2 August 2014, http://www.singaporenews.net/index.php/sid/224382417 (reporting a flash crash in October 2014 on the Singapore stock exchange).

187 Lin (n 182) 706 (‘While no other major crash has occurred since the Flash Crash, experts and regulators fear that it is only a matter of time before the “Big One”. And in the interim, smaller market disruptions have grown and will likely continue to grow more prevalent as cy-fi advances and proliferates’).

188 For a historical overview of the development of the SEC and the CFTC see Markham (n 99) 552–87.

189 Chicago Mercantile Exchange v SEC 883 F 2d 537, 543 (7th Cir 1989) certiorari denied, 110 US 3214 (1990).

190 See generally Benson (n 41) 1180–81.

191 ibid 1184.

192 7 USC § 2a(ii), (v) (1988) (US).

193 Benson (n 41) 1183.

194 Markham (n 99) 591–92.

195 ibid 587–88 (observing that exchanges now engage in offering platforms for trading in a variety of financial instruments, some of which were previously limited to exchanges regulated by either the SEC or the CFTC).

196 For a critical discussion of the attempts to merge the SEC and the CFTC see generally Markham (n 99).

197 For an overview of some of the early clashes see Benson (n 41) 1185–91. More recent turf wars are discussed by Markham (n 99) 569–87.

198 ibid 547–48.

199 Benson (n 41) 1178.