1. RC Clark ‘The Four Stages of Capitalism: Reflections on Investment Management Treatises’ (1981) 94 Harvard LR 56.

2. Such as broking, dealing services, asset management services, and underwriting services, rather than auditing or analyst services. The utility of financial brokerage is briefly discussed in Piesse, J, Peasnell, K and Ward, C British Financial Markets and Institutions (London: Prentice Hall, 1995) p 43, para 3.4.Google Scholar

3. Banbury v Bank of Montreal [1918] AC 626.

4. Law Commission Fiduciary Duties and Regulatory Rules Cm 3049 (London: Law Commission, 1995), to be discussed later.Google Scholar

5. Directive 2004/39/EC.

6. Although some commentators have observed that MiFID contains an extensive array of prescriptive detail, see N Moloney who describes the MiFID as an example of ‘intense regulatory intervention’ on the EU level, see ‘Financial Market Regulation in the Post Financial Services Action Plan Era’ (2004) ICLQ 982.

7. Financial Services Authority Principles-based Regulation: Focussing on the Outcomes that Matter (London: Financial Services Authority, April 2007) (FSA Paper). How the MiFID's maximum harmonisation regime may be reconciled with the FSA's principles-based regulatory framework remains to be seen. The detailed rules prescribed in the MiFID would likely constitute a compliance regime for delivering some, if not all, of the regulated outcomes specified by the FSA.

8. Law Commission, above n 4, p 4 for instance.

9. [2005] PNLR 39.

10. Matthew Conaglen ‘The Nature and Function of Fiduciary Loyalty’ (2005) LQR 452.

11. This is well-established as a category of fiduciary duties, see LS Sealy ‘Fiduciary Relationships’ (1962) Cambridge LJ 69.

12. See for example, Gordon Cameron and Monica Sah ‘Controlling the Quality of Financial Advice: the use of regulatory form to satisfy fiduciary obligations’ (1997) JBL 143 where the financial investment intermediary's role in giving out investment advice is interpreted as an exercise in fiduciary duties.

13. A generally accepted circumstance giving rise to fiduciary obligations is the fact of an undertaking of responsibility that involves the exercise of discretion and power on one party, entailing the reposing of trust and confidence from the other party, see Bristol & West BS v Mothew[1996] 4 All ER 698. Shepard, JC The Law of Fiduciaries (Toronto: The Carswell Book Co, 1981)Google Scholar argues that the fiduciary relationship generally consists of some undertaking by one party who is in a position to exercise discretionary ‘power’ over another, and trust and reliance the other, but each element of ‘reliance’, ‘undertaking’, ‘power’ and ‘discretion’ may be taken to their logical limits and may include many relationships the law would not wish to classify as ‘fiduciary’; LS Sealy ‘Fiduciary Relationships’ (1962) Cambridge LJ 69. Canadian authority has, however, emphasised much on the vulnerability of one party in the transaction to the other, see Hodgkinson v Simms[1994] 3 SCR 377. See discussion in MH Ogilvie ‘Fiduciary Obligations in Canada: from concept to principle’ (1995) JBL 638.

14. [1993] AC 205.

15. [1994] 1 AC 428.

16. Law Commission, above n 4.

17. On the contractarian thesis in fiduciary law, see Finn, PD Fiduciary Law’ in McKendrick, E (ed) Commercial Aspects of Trusts and Fiduciary Obligations (Oxford: Clarendon Press, 1992) p 7Google Scholar; Charles Harpum ‘Fiduciary Obligations and Fiduciary Powers’ and ; Matthew Conaglen ‘The Nature and Function of Fiduciary Loyalty’ (2005) LQR 452; Robert Flannigan ‘The Adulteration of Fiduciary Doctrine in Corporate Law’ (2006) LQR 449.

18. Brandeis (Brokers) Limited v Herbert Black, American Iron and Metal Company Incorporated, Lito Trade Incorporated 2001 WL 513189 illustrates that intermediaries may contract with their clients to opt out of self-regulatory standards.

19. A well-discussed history of the regulatory governance of financial investment intermediaries under the Financial Services Act regime of the SIB in partnership with self-regulating organisations may be found in Black, Julia Rules and Regulators (Oxford: Clarendon Press, 1997).CrossRefGoogle Scholar

20. The regulatory governance in EU financial services regulation is critically discussed in Chiu, Iris H-Y Regulatory Convergence in EU Securities Regulation (The Hague: Kluwer Law International, 20089, forthcoming).Google Scholar

21. See Financial Services Association Conduct of Business Handbook (COBS) p 3.

22. Ibid.

23. Financial Services and Markets Act 2000, ss 71 and 150.

24. MiFID Commission Directive, Arts 11–12.

25. Ibid, Arts 24 and 25(1).

26. Ibid, Art 25(2), implemented in COBS 12.2–4.

27. Ibid, Art 26, implemented in COBS 2.3.

28. See MiFID Commission Directive, recital (27).

29. COBS 11.7.1, COBS 12.2–4.

30. MiFID Commission Directive, Art 21.

31. Ibid, Art 22(1).

32. Ibid, Art 22(3).

33. Brandeis (Brokers), above n 18.

34. Although it may be queried why the contracting out could not apply to fiduciary duties as well, being in line with the Kelly v Cooper ([1993] AC 205) type of contractual reasoning allowing modifications of fiduciary duties. It may be arguable that the case treats fiduciary law as giving the client separate rights from those he expressly contracted out of that are embodied in regulation.

35. MiFID Commission Directive, Art 51.

36. Although there is authority in Australia allowing that approach, see eg Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (ACN 113 114832) (No 4), [2007] FCA 963, [2007] 241 ALR 705.

37. Conaglen, above n 10.

38. Glynwill Investments NV v Thornson McKinnon Futures Ltd (3 February 1992, unreported, Tuckey QC).

39. Hayton, D Fiduciaries in Context: An Overview’ in Birks (ed) Privacy and Loyalty (Oxford: Clarendon Press, 1997)Google Scholar has perhaps a more lenient view with respect to ousting fiduciary obligations by contract. John Glover thinks otherwise, see ‘Identification of Fiduciaries’ in Birks, ibid.

40. Beatson, Jack The Relationship Between Regulations Governing the Financial Services Industry and Fiduciary Duties under the General Law’ in McKendrick, E (ed) Commercial Aspects of Trusts and Fiduciary Obligations (Oxford: Clarendon Press, 1992)Google Scholar p 55.

41. Moloney, above n 6.

42. MIFID Commission Directive, Art 28.

43. COBS 3.3.

44. MiFID Commission Directive, Art 19(4) and (5), and Arts 35–38, and enacted by the FSA as COBS 9 and 10. MIFID Commission Directive, Art 35 further provides the details. The intermediary is to ascertain the investment objectives of the client, the financial risks that the client is able to bear and the knowledge and experience of the client.

45. MiFID Commission Directive, Arts 21 and 44–46, and Committee of European Securities Regulators Best Execution under MiFID: Questions and Answers (Paris: Committee of European Securities Regulators Google Scholar, May 2007) as guidelines and recommendations as to how best execution may be judged, enacted in full by COBS 11.2.

46. MiFID Commission Directive, Art 35, now COBS 9.

47. Ibid, Art 36, now COBS 10.

48. Ibid, Arts 19(6) and 38.

49. COBS 9.3.

50. COBS 9.6.12.

51. COBS 9.4.

52. MiFID Commission Directive, Art 21(1), COBS 11.1.

53. Ibid, Art 44, COBS 11.2.6.

54. Committee of European Securities Regulators, above n 45.

55. Although MiFID Commission Directive, Art 45 places some emphasis on achieving the best possible result for the client in portfolio management.

56. [2005] EWCA Civ 415.

57. [2005] EWHC 1137.

58. Ibid.

59. The law of negligence had its genesis in the famous case of Donoghue v Stevenson [1932] AC 562, and has since been developed to encompass situations of negligent advice occasioning losses that may be purely economic in nature, see Hedley Byrne v Heller & Partners Ltd [1963] 2 All ER 575.

60. [1918] AC 626, where it was held that a bank manager who was recommended by the investor's friend did not owe a duty of care in advising on investments in the absence of contract with the investor.

61. 1999 WL 1706063.

62. 2003 WL 933266.

63. See Sarah Worthington, ‘Fiduciaries: When is Self-Denial Obligatory?’ (1999) 58(3) Cambridge Law Journal 500, who characterises the fiduciary duty as arising out of law and not by contract, and that it is imposed for reasons of necessity and public policy.

64. [2007] PNLR 29.

65. Jenny Hamilton ‘Negligence in the corridor? The Interaction between Separate Rooms of Regulation and Common Law in Financial Services’ (2007) PN 134.

66. Aneco Reinsurance & Underwriting Ltd v Johnson & Higgins Ltd [2002] 1 Lloyd's Reports 157.

67. Jonathan B Wiener ‘Whose Precaution After All? A Comment on the Comparison and Evolution of Risk Regulatory Systems’(2003) 13 Duke J Comp & Int'l L 207; Shapiro, Sidney A and Glicksman, Robert L Risk Regulation at Risk (Palo Alto, CA: Stanford University Press, 2003)Google Scholar where the concept of preventative regulation based on risk is defended against charges of excessive social cost and paternalism.

68. A detailed examination of what risks are identified, how risks are adjusted to ‘net’ levels after considering firms' mitigation approaches, how regulators decide if particular risks ought to be addressed in regulation or supervision and the impact of regulation on firm activities, is presented in Black, Julia The Development of Risk-based Regulation in Financial Services: Canada, the UK and Australia – a Research Report (London: ECRC Centre for the Analysis of Risk and Regulation, London School of Economics, 2004).Google Scholar

69. Hood, Christopher, Rothstein, Henry and Baldwin, Robert The Government of Risk: Understanding Risk Regulation Regimes (Oxford: Oxford University Press, 2004).Google Scholar

70. Black, above n 68.

71. See Colin Scott ‘Analysing Regulatory Space: Fragmented Resources and Institutional Design’ (2001) Public Law 32; Julia Black ‘Decentring Regulation’ (2001) Current Legal Problems 103; Julia Black ‘Enrolling Actors in Regulatory Systems: Examples from UK Financial Services Regulation’ (2003) Public Law 63.

72. Howell E Jackson ‘Variation in the Intensity in Financial Regulation: Preliminary Evidence and Potential Implications’ (2007) 24 Yale J on Regulation 253 suggests that the economic cost-benefit approach will still remain important and relevant in determining regulatory intensity and design in many jurisdictions, in the area of financial services.

73. Chartered Financial Analyst Institute Self-regulation of Exchanges (Chartered Financial Analyst Institute, September 2007), available under ‘Publications’ on the CFA Institute website.

74. For example, the subprime crisis in mid to late 2007 leading to a general credit squeeze as a reaction to an accumulated problem of poorly assessed and managed risk.

75. Alexander, Kern, Dhumale, Rahul and Eatwell, John Global Governance of Financial Systems: The International Regulation of Systemic Risk (Oxford: Oxford University Press, 2004)Google Scholar; Michael Taylor ‘The Search for a New Regulatory Paradigm’ (1998) 49 Mercer L Rev 793.

76. As seen in the Brandeis (Brokers) case, above n 18.

77. See Dawn Batchelor ‘Risk-based Compliance Monitoring’ (1999) 7 Journal of Financial Regulation and Compliance 22.

78. Although MiFID Commission Directive, Art 45 places some emphasis on achieving the best possible result for the client in portfolio management.

79. Carol Alexander ‘The Present and Future of Financial Risk Management’ (2005) 3 Journal of Financial Econometrics 3 argues that risk has to be monitored and assessed on a real-time basis for management to be effective.

80. A theory of regulatory collaboration is discussed in Jody Freeman ‘Collaborative Governance in the Administrative State’ (1997) 45 UCLA Law Rev 1.

81. Julia Black, Rules and Regulators, above n 19 explains how general rules may achieve clarity if consistently applied within an interpretive community of the regulated. However, this may mean that the option of having judicial interpretation which is outside of the ‘community’ should be closed off in order to reinforce the development of clear and coherent application of the rules for the ‘community’.

82. See below, and Peter Cane ‘The Anatomy of Private Law Theory’ (2005) 25 OJLS 203; Randy E Barnett ‘Foreword: Four Senses of the Public Law-Private Law Distinction’ (1986) 9 Harv J of Law and Pub Policy 267.

83. Loughlin, Martin The Idea of Public Law (Oxford: Oxford University Press, 2003)Google Scholar, commentary by NW Barber, ‘Professor Loughlin's Idea of Public Law’ (2005) 25 OJLS 157.

84. Ralf Michaels and Nils Janssen ‘Private Law beyond the State: Europeanisation, Globalisation, Privatisation’ (2006) 54 Am J of Comp Law 843 in discussing this rationale from as early as Ulpain in the third century AD.

85. Weinrib, E The Idea of Private Law (Cambridge, MA: Harvard University Press, 1995).Google Scholar

86. See Daniela Caruso ‘Private Law and State-Making in the Age of Globalisation’ (2006) 39 NYJ of International Law and Politics 1 and Robert Wai ‘Transnational Private Law and Private Ordering in a Contested Global Society’ (2005) 46 Harv ILJ 471.

87. Dawn Oliver ‘Common Values in Public and Private Law and the Public/Private Divide’ (1997) Public Law 630.

88. Longley, D and James, R Administrative Justice (London: Cavendish, 1999)Google Scholar. There are, however, still live and theoretical issues regarding the position of tribunals in other jurisdictions, and questions revolve around whether there is ‘judicial power’ specifically reserved for courts (see , whether tribunals are able to disengage from preferring policy in dispensation of ‘justice’ (R Pound ‘Justice According to Law II’ (1914) 14 Columbia Law Rev 1; , and the balance to be struck between efficient, cheap and informal justice tribunals offer and the framing of legal procedures, rights and interests in the evolvement of administrative justice (see Carl N Pickerill ‘Specialized Adjudication in an Administrative Forum: Bridging the Gap between Public and Private Law’ (2007) 82 Notre Dame Law Rev 1605, Robert A Kagan ‘Inside Administrative Law’ (1984) 84 Columb LR 816; ; .

89. Case 039, see website available at http://www.financeandtaxtribunals.gov.uk/decisions/financial_services_markets_tribunal.htm.

90. Hamilton, above n 65.