About self-regulation in the securities market

About the CommitteeAbout self-regulation in the securities market

A well-functioning securities market presupposes common agreement and confidence among the public, investors, political decision-makers and companies. Swedish listed companies, their owners and advisors therefore have a strong interest in contributing to good ethics and practices in the securities market. That is best accomplished when the business sector and other stakeholders together formulate and decide on rules and what constitutes generally accepted principles. Self-regulation is also an important instrument for avoiding an excessively detailed regulation.

Takeover Rules, Renumeration Rules and the Swedish Corporate Governance Code are examples of areas where Sweden has opted for self-regulation rather than legislation. The greatest advantage is that the foremost experts in the market with experience in practice participate in formulation. Through self-regulation, rules are well-anchored with good adherence among those that apply rules. 

Another advantage of self-regulation is that it is flexible and can rapidly be developed and adjusted to changes. Self-regulation most probably also entails lower costs for companies in comparison to legislation.

The successively expanding and detailed EU regulation, with an increasing number of binding rules, at the same time entails challenges for Swedish self-regulation and require finding solutions as alternatives to EU regulation or as means to fulfil EU regulation in the area.

Even if some of the areas that traditionally have been covered by Swedish self-regulation now have been assumed and covered in European regulations, new forms have been developed to benefit from self-regulation in the new European regulatory context. Government functions in the securities area have been delegated by Finansinspektionen, Sweden’s financial supervisory authority, to the Swedish Securities Council and the Council for Swedish Financial Reporting Supervision, which signifies the strong position that self-regulation enjoys.