Chapter

Information Intermediaries

John Armour, Dan Awrey, Paul Davies, Luca Enriques, Jeffrey N. Gordon, Colin Mayer and Jennifer Payne

in Principles of Financial Regulation

Published in print July 2016 | ISBN: 9780198786474
Published online October 2016 | e-ISBN: 9780191828782 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198786474.003.0006
Information Intermediaries

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  • Constitutional and Administrative Law
  • Company and Commercial Law

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Before they execute their trading strategies, virtually all informed traders in securities markets have to acquire at least some information from intermediaries that specialize in conveying and/or processing it, ie information intermediaries. Under this heading, this chapter refers to a variety of information providers and processors performing very different functions within the financial market. It reviews key issues relating to the production, processing, and distribution of information in capital markets, before turning to the specific roles played by five different types of information intermediaries: underwriters, analysts, credit rating agencies, auditors, and lawyers. It then examines the regulation of these groups in the context of the range of regulatory techniques utilized in this area: disclosure, rules designed to ameliorate the problem of conflicts of interest, regulatory oversight, qualification requirements, intermediaries’ liability for damages incurred by investors, and other techniques designed to increase the intermediary’s incentive to maintain its reputation.

Keywords: information intermediaries; underwriters; analysts; credit rating agencies; auditors; lawyers; conflicts of interest

Chapter.  13312 words. 

Subjects: Constitutional and Administrative Law ; Company and Commercial Law

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