Take the example of Germany, which has a bank-based system of corporate finance. German companies procure a wide range of services from their banks. The boundaries between customer business, hedging transactions, market making and traditional proprietary trading are consequently fluid. Finding the right dividing line in the grey area between those activities would be difficult and prone to lobbyism.
If comparable standards are not implemented in all jurisdictions simultaneously, financial activity will likely migrate to less regulated jurisdictions as well as into shadow banking with disruptive consequences for the entire global financial system. As we move forward in the area of regulation, the investment needs of the emerging market and developing economies also deserve special attention.