Securities Law

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Essay
Central Clearing the U.S. Treasury Market
Yesha Yadav
Milton R. Underwood Chair, Associate Dean and Professor of Law, Vanderbilt Law School.

We benefited greatly from thoughtful comments and conversations in the preparation of this Essay. The authors are enormously grateful to Dan Awrey, David Bowman, Jonathan Brogaard, Adam Copeland, Darrell Duffie, Ellen Correia Golay, Frank Keane, Kate Judge, Megha Kalbag, Mike Koslow, Dina Marchioni, Rebecca McCaughrin, Saule Omarova, Julie Remache, Morgan Ricks, Will Riordan, Pradeep Yadav and participants at the University of Chicago Law Review’s Symposium on Financial Regulation in the Crucible: Private and Public Law Perspectives on a Sector in Crisis. We are also most appreciative of the extraordinarily talented editors and staff at the University of Chicago Law Review for their careful edits, commentary and patience. The views expressed by the authors are their own and may not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System.

Joshua Younger
Policy Advisor at the Federal Reserve Bank of New York and Lecturer in Law at Columbia Law School.

We benefited greatly from thoughtful comments and conversations in the preparation of this Essay. The authors are enormously grateful to Dan Awrey, David Bowman, Jonathan Brogaard, Adam Copeland, Darrell Duffie, Ellen Correia Golay, Frank Keane, Kate Judge, Megha Kalbag, Mike Koslow, Dina Marchioni, Rebecca McCaughrin, Saule Omarova, Julie Remache, Morgan Ricks, Will Riordan, Pradeep Yadav and participants at the University of Chicago Law Review’s Symposium on Financial Regulation in the Crucible: Private and Public Law Perspectives on a Sector in Crisis. We are also most appreciative of the extraordinarily talented editors and staff at the University of Chicago Law Review for their careful edits, commentary and patience. The views expressed by the authors are their own and may not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System.

The market for Treasury securities, a deep and liquid market for risk-free debt, has anchored an ambitious and creative U.S. dollar economy while also ensuring the safety and soundness of its financial and monetary system. But as the market has grown, a series of disruptions to Treasury market trading have prompted policymakers to explore measures to strengthen the market’s foundations and shore up its resilience. This Essay considers this regulatory response. It focuses on the introduction of mandatory central clearing for most trades in U.S. Treasuries—a proposal seeking to significantly reshape the day-to-day functioning of the Treasury market. Central clearing is a well-established means by which to reduce the risk of loss associated when trading parties default. We analyze this mandate, detailing its likely advantages as well as its potential trade-offs from a public policy perspective.

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Essay
Securities Regulation and Administrative Law in the Roberts Court
David Zaring
Elizabeth F. Putzel Professor, The Wharton School at the University of Pennsylvania.

Thanks to Vincent Buccola, Christine Chabot, Haiyun Damon-Feng, Donna Nagy, Christina Skinner, Chris Walker, and for comments at presentations at the University of Chicago, the 2024 ABA Administrative Law Section Spring Meeting, and the 2024 National Business Law Scholars Conference. Thanks also to Rachel Shoemaker and Elizabeth Weise for research assistance.

This Essay compares a judicial revolution that is happening to one that is not. Both the change and the status quo are being managed by the current Supreme Court. That Court has, when it comes to administrative law, shown a capacity to revisit everything. But when it comes to securities regulation, it has resisted change. What is the explanation for this divergent approach between general regulation, which the Court has sought to police, and securities regulation, which the Court has left alone? Some scholars have argued that the Supreme Court is simply uninterested in securities regulation, but the Court now hears proportionately more securities cases than it once did. Others dispute the premise that the Court supports corporate America. And, of course, the Roberts Court could change its approach to securities regulation in time. But I think the divergence suggests that the Court wants to police public rights and rights against the state but is less interested in reformulating the standards for private disputes, such as disputes between shareholders and managers.

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Essay
How Artificial Intelligence Will Shape Securities Regulation
Gabriel V. Rauterberg
Professor of Law, University of Michigan

My views on these subjects owe much to my collaborators, especially Michael Barr, Megan Shearer, and Michael Wellman, with whom I have been studying the behavior of algorithmic traders in financial markets, and Howell Jackson, with whom I have been presenting on social media and capital markets at PIFS-IOSCO’s trainings for securities regulators. All errors are my own. Thanks to the participants at the University of Chicago’s Symposium on “How AI Will Change the Law” for helpful comments, and to the editors of the University of Chicago Law Review for their helpful insights.

This Essay argues that the increasing prevalence and sophistication of artificial intelligence (AI) will push securities regulation toward a more systems-oriented approach. This approach will replace securities law’s emphasis, in areas like manipulation, on forms of enforcement targeted at specific individuals and accompanied by punitive sanctions with a greater focus on ex ante rules designed to shape an ecology of actors and information.

Machine Learning Regulation Securities Securities Law
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Essay
Agency Problems and the Misappropriation Theory of Insider Trading in SEC v. Panuwat
Ryan Fane
Ryan Fane is a J.D. candidate at the University of Chicago Law School, Class of 2023.

He thanks the members of the University of Chicago Law Review Online team for their helpful feedback and suggestions.

This case raises some difficult theoretical questions about what harms insider trading laws are supposed to prevent and what benefits they are supposed to provide to the marketplace.

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Article
85.6
A New Market-Based Approach to Securities Law
Kevin S. Haeberle
Associate Professor of Law, William & Mary Law School
M. Todd Henderson
Michael J. Marks Professor of Law and Mark Claster Mamolen Research Scholar, University of Chicago Law School

Many scholars have proposed market-based solutions to the well-known shortcomings of modern securities law.

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