Briefly, microstructure theory examines how trading systems and traded security influence market behaviour. See J. Glen,An Introduction to theMicrostructure of EmergingMarkets, Discussion Paper No. 24, IFC, Washington, (November 1994) p. 2. See J. Norton and H. Sarie-Eldin's article, "Securities law models in emerging economies", in J. Norton and M. Andenas (eds.), Emerging Financial Markets and the Role of International Financial Organisations, Kluwer, 1996, pp. 344-349. See H. Stoll, Regulatian of SecuritiesMarkets: An Examination of the Effects on Increased Competition, Monograph Series in Finance and Economics, New York University, 1979, pp. 5-6. See E. Willett, Fundamentals of SecuritiesMarkets, New Century, New York, 1971, p. 21.

5 See P. Dattels, The Microstructure of Government Securities Markets, Monetary and Exchange Affairs Department, IMF, WP/95/117 (November 1995), p. 6. 6 Ibid., pp. 6-7. This is technically referred to as "intertemporal consolidation of order flow". On the other hand, continuous trade execution allows more flexible trading strategies, providing "contemporaneous" information on price, transactions and overall general market condition. See ibid., p. 6. 8 See Stoll, Regulation ofSecuritiesMarkets, pp. 5-6. 9 See Willett, Fundamentals of SecuritiesMarkets, p. 61. 10 See R. Pardy, Regulatory and Institutional Impacts of Securities Market Computerization, Country Economic Department, World Bank, WPS 866 (February 1992), p. 5. 11 Such a definition refers to an open-outcry call auction. In this context, "price discovery" refers to finding the price at which trades are made or "equilibrium value". Equilibrium value means that the price of a security reveals fully the underlying demand and supply conditions. See Dattels, Tbe Microstructure of Government Securities Markets, pp. 45, 46, 51. �z Commercial papers (CPs) are often used as a close substitute for bank borrowing by large corporations which enjoy high credit ratings. See T. Smith, Markets for Corporate Debt Securities, Research Department, IMF (July 1995), pp. 3-4. i3 See F. Fabozzi, Capital Markets: Institutions and Instruments, Prentice Hall, New Jersey, 1996, p. 12.

14 See K. Garbade, SecuritiesMarkets, McGraw-Hill, United States, 1982, p. 1. 15 Most notable markets that are moving in this direction are the Kuwaiti, Moroccan, Egyptian and Lebanese. 16 See Willett, Fundamentals of SecuritiesMarkets, pp. 89, 96. 17 on the definition of debentures and an exposition of relevant UK Companies Act 1989 provisions, see P. Davies, Go)pet0s Principles ofModern Company Law, Sweet & Maxwell, 1997, pp. 321-326. Generally speaking, however, upon the liquidation of the corporation debt instrument claims have priority over share claims. 18 Ibid., p. 299. �9 Cf para. 4.02 of Gower, RevitJVofInvestor Protection, Part I (January 1984), Cmnd. 9125, where "all types of property except physical objects over which the purchaser has exclusive control after their acquisition" were included in the definition. However, the definition of "investment" and "investment business" (FSA 1986 Sched I, Part I and parts II-III respectively) is seen as "prolix", though such definitions can be easily altered by secondary legislation. See E. Lomnicka et al. "The UK Model of Securities Regulation", in J. Norton and M. Andenas (eds.), Emerging Financial Markets and the Role of International Financial Organisations, Kluwer Law International, 1996, p. 455.

20 See Lomnicka, "UK model". 21 See R. Hameed, "Some comparative aspects of securities regulation in the United Kingdom and the United States", unpublished PhD thesis, University of London, 1993, pp. 68-69. zz See Tchereonin v. Knight ( 1967) 389 US 332, 336; United Housing Foundatian Inc. v. Forman (1975) 421 US 837, 847, Hameed, "Some comparative aspects", note 12. For its part, the Exchange Act 1934, inter alia, did not contain a reference to "evidence of indebtedness" as a security. Neither is the certificate of interest or participation extended to any oil, gas or other mineral royalty or lease. z3 (1943) 320 US 344, (1946) 328 US 293, (1975) 421 US 837, (1985) 471 US 681, respectively. See L. Loss, Fundamentals of Securities Regulation, Little Brown, Canada, 1988, pp. 165-202.

z4 See W. El-Malik, Mineral Investment under the Shariat Law, Graham & Trotman, 1993, p. 4. zs The clearest example is Sunni and Slu'ite diametrically opposed views on the legality of temporary marriage, which is predetermined from the outset to last for a specific time. While Sunnis condemn it as illegal bordering on prostitution, Shi'ites on the other hand accept it as legitimate. zb For a brief explanation of these Islamic legal schools see El-Malik, supra note 24, pp. 34-37. 27 See M. Mannan, Mulla's Principles ofMahomedian Law, Pakistan edn., PLD Publications, Lahore, 1991, pp. 30-33. there are often some variation in the enumeration of these sources. See for example J. Burton, The Sources of Islamic Law: Islamic Theories ofAbrogation, Edinburgh University Press, 1990, pp. 9-18, where he enumerates sources of Islamic law as the Qu'ran, Sunna, Islamic sciences and usul al-Fikh (Islamic jurisprudence). z9 See N. Ray, Arab Islamic Banking and the Renewal of Islamic Law, Graham & Trotman, 1995, p. 27. The meaning of ijma` has varied over the years. It originally meant the consensus of the Islamic nation. Some writers have even unconvincingly argued that ijma' refers to the concurrence of the Prophet's companions on a solution to a particular question that was not addressed in revealed sources. See, for example, M. and A. Hidayatullah, Mulla's Principles of Mahomedan Law, Bombay, NM Tripathi Private, 1990, s. 33. 3° Hidayatullah defines Hadith as: "precepts, actions and sayings of the Prophet Mahomed ... not written down during his lifetime, but preserved by tradition and handed down by authorized ... persons." " 31 See D. Dwyer, Law and Islam in the Middle East, Bergin & Garvey, 1990, p. 2.

3z I7wyer, however, defines Sunna as "the model behavior ... of the Prophet" and qiyas as "analogic reasoning". Ibid. 33 Taqlid literally translates to imitation. See R. Sharma and N. Maheshwari, Key to Islamic Law, Baroda Law House, India, 1988, p. 1. 34 See M. Kamali, "Methodological issues in Islamic jurisprudence",ArabLawQuarterly, 1996, p. 3. For other interesting work on Islamic legal theories see generally W. Hallaq, A History of Islamic Legal Theories: An Introduction to Sunni UsulAl-Fiqh, Cambridge University Press, 1997; A. Ibrahim, "Sources and development of Muslim law", Malayan Law Journal, Singapore, 1965; A. Rahim, Muhammadan jurisprudence, Lahore, 1970; J. Schacht, The Origins of Muhammadan jurisprudence, Clarendon Press, 1979; and N. Coulson, Conflicts and Tensions in Islamic jurisprudence, University of Chicago Press, 1969. 3s Many learned writers acknowledge this fluid state of affairs. See for example, M. Khan, "Islamic interest-free banking: a theoretical analysis", in M. Khan and A. Mirakhor, Tbeoretical Studies in Islamic Banking and Finance, IRIS Books, United States, 1987. 36 See generally A. Buang The Prohibition of Gharar in the Islamic Law of Contracts: A Conceptual Analysis with Special Referen ce to the Practice of Islamic Commercial Contracts in Malaysia, PhD thesis, s, London University, 1995, section dealing with relationship between shari a and Arab civil codes. 3� Note that Egypt had its own Civil Code of 1875 which is often seen as a hybrid of shari'a and Western laws. 3A In 1949. 39 In 1951. 40 In 1976. 41 In 1980. 4z In 1985.

43 See N. Saleh, "Financial transactions and the Islamic theory of obligations and contracts", in C. Mallat (ed.), Islamic Law and Finance, Graham & Trotman, 1988, p. 26. " For an account of Islam's value system influence on saving, consumption, investment and production decisions see M. Arif, Monetary and Fiscal Economics of Islam, King Abdulaziz University Press, Saudi Arabia, 1982, pp. 2-7. 4s See M. Zineldin, The Economics ofMoney and Banking: A Theoretical and Empirical Study of Islamic Interest-Free Banking, Almqvist & Wiksell International, Stockholm, 1990, pp. 43-51. 46 See A. El-Ashker, The Islamic Business Enterprise, Croom Helm, 1987, p. 60. 4� See P. Moore, Islamic Finance: A Partnenhipfor Gmavh, Euromoney Publications, 1997, pp. 15, 69. 4s See M. Chapra, "Money and banking in an Islamic economy", in M. Arif, Monetary and Fiscal Economics oflslam, p. 152. 49 Private enterprises are encouraged in Islam and even envisaged to participate on an equal footing with public enterprises in fulfilling the objective of economic development. See M. Khan, "The financial system and monetary policy in an Islamic Economy", in M. Khan and A. Mirakhor (eds.), Theoretical Studies in Islamic Banking and Finance, IRIS Books, United States, 1987, pp. 163-164.

50 See Moore, Islamic Finance, pp. 32-42 and Butterworths Editorial Staff (ed.), Islamic Banking and Finance, Buttenvorths, London, 1986, pp. 86-88. For a Western perspective on Islamic banking in general and Islamic financing techniques see for example, European Perceptions of Islamic Banking, a collection of articles issued by the Institute of Islamic banking and Insurance, London, 1996, particularly the article by J. Martin, "Security in Islamic Banking", pp. 69-76. si See C. Price et al., "Legal aspects of Islamic banking and finance", in Moore, Islamic Finance, p. 113. sz Ibid. 53 See A. Bananga et al., F�ternalAudit and Corporate Governance in Islamic Banks, Athenaeum Press, UK, 1994, pp. 15-16. s4 For an interesting study of the legal liabilities arising from mudaraba contracts See M. Siddiqi, Partnesyhip and Profit-Sharing in Islamic Law, The Islamic Foundation, London, 1985. 55 See El-Ashker, The Islamic Business Enterprise, p. 75.

56 Leasing, lending and hire-purchase contracts are here seen as not substantially different from equivalent Western mechanisms of financing. See Ray, Arab Islamic Banking, p. 37. 57 For a comprehensive account of mediaeval and modern variations of Islamic financing mechanisms see ibid., pp. 37-83. 58 It is a Shi'ite sub-sect dominant in Iran and largely present in Kuwait, Bahrain, Lebanon, and Iraq. s9 Largely the majority sub-sect in Oman. bo See generally S. Al-Kuhaimi, "Contract law and the judicial system in Saudi Arabia", PhD thesis, London University, 1982; I. Edge, "Comparative commercial law of Egypt and the Arabian Gulf', Cleveland State Law Review, 34, 1985-1986; S. Mahmasani, The General theory of tbe Law of Obligation and Contracts under Islamic Jurisprudence, 2 vols. Beirut, 1972; P. Owsia, formation of Contract: A Comparative Study under English, French, Islamic ared Iranian Law, Graham & Trotman, 1994; N. Anderson, "Theshal'Í'a and civil law: the debt owed by the new civil codes of Egypt to theshari'a", The IslamicQuarterly, vol. 1, 1954; and N. Saleh, "Definition and formation of contract under Islamic and Arab laws",Arab Law Quarterly, May 1990. See also generally J. Schacht, An Introduction to Islamic Law, Oxford 1964, and N. Coulson, A History of Islamic Law, Edinburgh, 1964. 61 See generally, F. Moghaizel, "Insurance in the light of Islamic legal principles", PhD thesis, London University, 1991; M. Al-Zarqa, NazamAI-Ta'min [Insurance System], Beirut, 1984; M Muslehuddin Insurance and Islamic Law, New Delhi, 1982; A. Rahman, Banking and Insurance, London, 1979; M. Siddiqi, Insurance in an Islamic Ecanamy, The Islamic Foundation, 1985; and M. Billah, "A model of life insurance in the contemporary Islamic economy", Arab Law Quarterly, 1997, pp. 287-306. 62 See for example, I. Ghanem, "The role of Islamic law in commercial litigation in North Yemen", PhD thesis, University of London, 1987. 63 See N. Saleh, Unlawful Gain and Legitimate Profit in Islamic Law, Graham & Trotman, 1992, p. 17. On works that have touched on riba, see for example C. Mallat, "The renaissance of

cont. Islamic law: constitution, economics and banking in the thoughts of Muhammad Baqer As- Sadr", PhD thesis, London University, 1990; S. Madi, "The concept of unlawful gain and legitimate profit in Islamic law", PhD thesis, London University, 1989; N. Thani, "Legal aspects of the regulatory framework of the Malaysian financial system", PhD thesis, London University, 1993, especially pp. 278-320; E. Kazarian, "Finance and economic development: Islamic banking in Egypt", PhD thesis, Lund University, Sweden 1991; A. Kharrufa,Al-Riba Wa'l-Fa'ida [Usury and Interest], Baghdad 1962; A. Qureshi, Islam and tbe Theory oflnterest Lahore, 1974; M. Siddiqi, Banking without Interest, The Islamic Foundation, 1983; S. Siddiqui, Islamic Banking, Royal Book Company, 1994, especially pp. 1-25; S Homoud Islamic Banking, Arabian Information, London, 1985, especially pp. 47-181; and M. Zineldin, The Economics of Money and Banking: A Theoretical and Empirical Study of Islamic Interest-Free Banking, Almqvist & Wiksell International, Stockholm, 1990. For articles, see: A. Mayer, "The regulation of interest charges and risk contracts: some problems of recent Libyan legislation", International and Comparative LawQuarterly, vol. 28, 1979, especially pp. 541-553; N. Cagatay, "Riba and interest concepts and banking in the Ottoman empire", Studia Islamica, 32, 1970; and R. Wilson, "The issue of interest and the Islamic financing alternative", Journal of International Banking, 1998, especially pp. 23-25. 64 Fadl literally means excess. �5 See Saleh, Unlawful Gain and Legitimate Profit in Islamic Law, pp. 16-17. 66 See S. Amin, Islamic Banking and Finance: The Expedience of Iran, Vahid Publications, Iran, 1986, p. 25. 67 Main Qur'anic verses arc found in SuretArRasm, SuretAn Nissa', SuretAllmran, SuretAl- Baqara. Main Prophet Citations (or Hadith) are found in citations on debt-usury and citations on sale-usury. For an excellent synopsis of these Qur'anic verses and citations see Homoud, Islamic Banking, pp. 64-85. 68 See Moore, Islamic Finance, p. 17.

69 For an account of such Qur'anic verses and Prophet citations see A. Buang, "The prohibition of gharar in the Islamic law of contracts: a conceptual analysis with special reference to the practice of Islamic commercial contracts in Malaysia", PhD thesis, London University, 1995, pp. 129-165. 70 See Saleh, Unlawful Gain and Legitimate Profit in Islamic Law, pp. 66-105. See also Buang, "The prohibition ofgbarar in the Islamic law of contracts", pp. 233-252. 71 See Buang, "The prohibition ofgharar in the Islamic law of contracts", pp. 233, where, although he qualifies his evidence with later juristic "refinements", he nevertheless mentions the acceptance of such interpretation by notable Islamic jurists such as Ibn Rushid, Ibn Hazm and Baji. �2 See Saleh, Unlamful Gain and Legitimate Profit in Islamic Law, p. 62. �3 See N. Comair-Obeid , "Particularity of the contract's subject matter in the laws of the Arab Middle East",ArabLaN�Quarterly, 1994, p. 335. '4 Definition by the Islamic jurist Al-Zarqa as quoted in M. Zahraa, "Negotiating contracts in Islamic and Middle Eastern laws",ArabLawQuarterly, 1998, p. 265. �5 Definition by AI-Ssbouni, Ibid. '6 Ibid.

77 See Saleh, "Financial transactions and the Islamic theory of obligations and contracts", p. 21 and Unlawful Gain and Legitimate Profit in Islamic Law, pp. 63-64. 78 See D. Hill et al., "Comparative survey of the Islamic law and the common law relating to the sale of goods", Journal ofislamic and Comparative Law, vol. 2, Ahmad Bello University, Nigeria, 1968, p. 90. �9 See Comair-Obeid, "Particularity of the contract's subject matter in the laws of the Arab Middle East", pp. 344-345. 80 Ibid.

81 For a discussion on this see for example "Islamic equity investment", TheArab Banker, vol. IV, No. 4, 1997, London, pp. 26-30 and "Legal structure of Islamic finance and privatisation", Yearbook of Islamic and Middle Eastern Law, vol. 2 (1996), pp. 32-50. ez For example as an indication of the rising importance ofshari`a in some Arab countries, Art. 2 of the Egyptian Constitution was amended in 1980 to make sbari'a the principal source of law. See Ballantyne, "A reassertion of the Shari`ah: the jurisprudence of the Gulf states", p. 157, in N. Heer, Islamic Law and Jurisprudence, University of Washington Press, 1990. 83 See Moore, Islamic Finance, p. 75. 84 See subsection dealing with the Arab definition of securities.

$s See Buang, 'The Prohibition of Gharar in the Islamic Law of Contracts", pp. 223-224. gb See Saleh, "Financial transactions and the Islamic theory of obligations and contracts", pp. 20-21. 8� This is normally no more than 12 per cent. Such a limit is imposed for example in Jordan and Egypt. aa See R. Turner, "Security and enforcement in Dubai and the other United Arab Emirates",Arab Law Quarterly, 1991, p. 312. 89 See Moore, Islamic Finance, pp. 155-156. 9° See Buang, "The Prohibition of Gharar in the Islamic Law of Contracts", p. 338. 91 Article 534 reads: "A loan is a contract by which a lender undertakes to give to the borrower a sum of money or any other fungible thing on condition that the latter will return a thing equal in kind, quality and amount". 92 Article 547 reads: "(1) Lending shall be without interest; every stipulation otherwise shall be null without prejudice to the contract of the loan itself. (2) Every advantage stipulated by the lender is deemed tantamount to interest."

93 Article 102 reads: "( 1 ) A creditor is entitled to charge interest on commercial loan, save where otherwise agreed; where the rate of interest is not stated in the contract, interest which accrues shall be the legal rate (i.e. 7 per cent). (2) Where the contract stipulates a rate of interest and the debtor delays payment, the delay interest shall be computed on the basis of the agreed rate." 94 See Saleh, Unlawful Gain and Legitimate Profxt in Islamic Law, p. 7. 9s Ibid., p. 9. 96 G. Attia, "Financial Instruments Used by Islamic Banks", in Islamic Banking and Finance, pp. 103-113. 97 See L. Errico et al., Islamic Banking: Issues in Prudential Regulations and Supervision, Monetary and Exchange Affairs Department, IMF (March 1998), p. 24.

9s The same definition is also repeated by Art. 2 of the Amman Financial Market Law of the year 1976. And again the same definition is given in Art. 2 of the Amman Financial Market Law No. 31 of the year 1992. 99 See H. Blommestein et al., The Role of Financial Institutions in the Transition to a Market Economy, Research Department, IMF, WP/93/75 (October 1993), p. 23. See R. Pardy, Institutional Reform in Emerging SecuritiesMarkets, Country Economic Department, World Bank, WPS 907 (May 1992), pp. 2-3. ioo See generally M. Chuppe et al., Regulation of SecuritiesMarkets, World Bank, WPS/829 (January 1992). 101 For studies examining efficient market theories and their implication see for example S. Keane, Stock Market Ef�ciency: Theory, Evidence and Implications, Philip Allan, Oxford, 1983; W. Baumol, The Stock Market and Economic Efficiency, Fordham University Press, New York, 1965; M. Firth, Share Price and Mergers: A Study of Stock Market Efficiency, Saxon House, 1976; 1. Asimakopoulos et al., Stock Prices, Exchange Rate and Market Efficiency, Research Paper No. 97/4, Institute of European Finance, University of Wales, 1997.

t°z See Dattels, The Microstructure of Government SecuritiesMarkets, pp. 27-28. 103 See M. Long, et al., Financial Regulations: Changing the Rules of tbe Game, Country Economic Department, World Bank, WPS 803 (Nov. 1991), p. 13. to4 See Norton and Sarie-Eldin, "Securities law models in emerging economies", p. 338. 105 See Pardy, Institutional Reform in Emerging Securities Markets, Country Economic Department, p. 5. 106 See generally, Note, "Disclosure as a Legislative Device" 76 (1962-1963) Harvard Law Review 1273, as quoted in Hameed, "Some comparative aspects of securities regulation in the United Kingdom and the United States", p. 42. 107 Ibid., p. 44. toa Broadly speaking, market failure occurs when markets are not efficient. See A. Page et al., Investor Protection, Weidenfeld & Nicolson, London, 1992, p. 35. t°9 See D. Vittas, Policy Issues in Financial Regulation, Country Economics Department, World Bank, WPS 910 (May 1992), p. 5. tto See Page, InvestorProtection, pp. 35-39. 111 On the prevention of dishonesty, it is argued that "sharp" fraudulent practices will not normally be sufficiently addressed by general law and that "prevention is better than cure". With regard to informational problems, it is assumed that information (as a public good) will often be

cant. insufficiently supplied, justifying intervention to "compel" disclosure to enable investors to make informed calculations on risk and return. Moreover, as "experience goods" (which differ from "search goods" such as clothing), information in an investment context cannot generally be evaluated in advance by lay investors, rendering them particularly vulnerable to the skill and probity of fmancial advisors. See Page, Investor Protection, pp. 35-38. 112 See Regulation of the United Kingdom Equity Markets: Report by the Securities and Investment Board, the Securities and Investment Board, June 1995, London. l3 For a follow-up on this report, see also Regulation ofthe United Kingdom Equity Markets, Market Views: A Digest of Responses to SIB's Discussion Paper, the Securities and Investment Board, June 1995, London. 11' See generally http://www.fsa.gov.uk/. For an interesting perspective in the pre-launch era of the FSA see "Perspectives in the FSA", The Financial Regulator, vol. 2, no. 3, December 1997, pp. 24-36. us See for example K. Kalotay, EmergingMarkets and the Scope for Regional Cooperation, United Nations Conference on Trade and Development, UNCTAD/OSG/DP/79, (February 1994), pp. 24-26 and 37-41, Norton and Sarie-Eldin, "Securities law models in emerging economies", pp. 444--445, Long, Finaruial Regulation, pp. 5-7, and Pardy, Institutional Reform in Emerging SecuritiesMarkets, Country Economic Department, pp. 22-27. For an interesting discussion on government and regulation, see J. Barth et al., Financial Regulation and Performance: Cross- Country Evidence, Development Research Group, World Bank, WPS2037 (January 1999), pp. 7-13 and Page, Investor Protection, pp. 78-84. For a recent general account of the changing role of the state in economic matters, see V. Tanzi, The Changing Rale of the State in the Economy,: A Historical Perspective, Fiscal Affairs Department, IMF, WP/97/114 (September 1997).

116 In addition of course to boosting investor confidence and market growth. See generally "Private market financing for developing countries", World Econamic and Financial Survey, IMF (December 1993). 117 See Blommestein, The Role of Financial Institutions in the Tramition to a Market Economy, pp. 24-26. 118 See Dattels, The Microstructure of Government Securities Markets, pp. 27-28. 119 See A. Abisourour, "The emerging Arab capital markets: Status, role and development prospects", in S. El-Naggar, Financial Policies and Capital Markets ixi Arab Countries, IMF, 1994. pp. 65-66. 120 Iraq opened a formal stock exchange in 1992, though. However, at the end of September 1997 Iraq promulgated new Companies Law No. 21 of 1997 which came into effect on 28 December 1998. The new law identifies four types of companies: public, private (limited liability), partnership and sole trading companies. See S. A]-Mukhtar's survey of Iraq, p. 269, in the Yearbook oflslamicandMiddleEastern Law, vol. 4 (1997-1998). Iraq, however, has a semi-functioning stock exchange regulated by the Baghdad Stock Exchange Law No. 24 of 1991. In January 1997, new listing and admission regulations were promulgated (in accordance with Art. 26 of Law No. 24 of 1991). ). lzi Syria does not have a formal stock exchange, although informal trading in shares is on the increase. However, draft Art. 337 of the Syrian Commerce Code is being debated in Syria in order to introduce holding companies on a par with Arts. 232-236 of the 1989 Jordanian

cont. Companies Act or the Lebanese legislative degree No. 45 of 24 of June 1983 on holding companies. See J. el-Hakim's survey of Syria, in the Yearbook of Islamic and Middle Eastern Law, vol. 3 (1996), pp. 186-188. However, although it has rejected World Bank and IMF economic structural adjustment programmes, since the early 1990s Syria has been adopting more liberally orientated economic policies, such as Law No. 10 of 1991, which grants productive investments (by Syrians and non-Syrians) tax exemptions and regulatory privileges. These "productive investments" are expected to "create employment, promote import substitution and exports, and lead to transfer of technology and managerial expertise." See H. Azzam, The Emerging Arab CapitalMarkets: Investment Opportunities in Relatively UnplayedMarkets, Kegan Paul International, 1997, p. 60. izz GCC countries comprise Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates and Oman. However, it must be cautioned that GCC revenues have declined sharply due to record- low oil prices. lz3 See A. Al-Melhem, "Privatisation and protection of investors in Kuwait: Reality and ambition", ArabLawQuarterly, 1998, p. 195. 1z41bid. us These regulations known as Regulations for Investment Funds and Collective Investment Schemes, Ministerial Decision of the Minister of Finance and National Economy No. 2052 (17 January 1993) addressed issues relating to: management of funds, capital adequacy, limitation of investment in other funds, etc. See R. Meyer-Reumann, "The banking system in Saudi Arabia", Arab LawQuarterly, 1995, p. 227.

126 However, the afore-mentioned does not imply that Arab countries did not pay adequate attention to their investment legislation, which is becoming highly orientated towards attracting regional and international investors. Jordan, for example, has passed a number of laws that aim at promoting domestic investment. These include the 1955 Encouragement and Guidance of Manufacturing Act (No. 27), the 1955 Encouragement of Foreign Capital Act (No. 28) and the 1967 Provisional Act for Investment Promotion (No. 1). The 1972 Investment Promotion Act (No. 53) and the 1987 Encouragement of Investment Act (No. 11) are also among such laws. However, one of Jordan's investment laws which aims at promoting Arab and foreign investment in Jordan is the 1992 Act Regulating Arab and Foreign Investments. This Act has been instrumental in facilitating foreign and Arab investment in Jordan. A follow-up to this Act were the 1992 Regulations Organizing Arab and Foreign Investments. In addition, the 1995 Investment Promotion Act (No. 15) was modified and offers customs and income tax exemptions. fizz Transactions that involve no change in beneficial ownership. 128 Concentrated buying of securities by a syndicate or a group of people that is then followed by attempts to raise the price by falsely stimulating public interest. The group disposes of its securities once a satisfactory appreciation in the prices has occurred. 129 Transactions that involve sale or purchase of security in the knowledge that a matching order will be entered into by the same person or their associates at substantially the same price. i3o See Loss, Fundamentals of Securities Regulation, pp. 702-709. 131 See especially ss. 13-14 of this Act. An earlier version of this Act was embodied in the Prevention of Fraud (Investments) Act 1939. �3z Law No. 20 of 1976 Concerning the Combating of Fraud in Commercial Dealings.

t33 See subs. (2) of s. 47 of the 1986 Financial Services Act. 134 See CRW Ltd v. Senddon ( 1972) 72 AR (NSW) 17, as cited in K. Au, "Major issues in securities tegulation in the 1980s: a comparative study", PhD thesis, University of London 1994, p. 119. 13s For views in support of giving more role to civil penalties see Securities Markets in OECD Countries: Organisation and Regulation, OECD Documents (1995), p. 10. 136 See A. Al-Methem, "Insider dealing in the Companies Act of Kuwait No. 15 of 1960", Arab LawQuarterly, 1998, p. 14.

�3� In this context, note the recent development in the US where the Supreme Court ruled that the SEC could apply Rule 14e-3(a) on non-corporate insiders. Rule 14e-3(a) prohibits trading on inside information in a tender offer situation, notwithstanding the absence of a duty to disclose. See US Department of Justice, FBI "White-Collar Crime: Facts and Cases", Chapter III (Securities Fraud), 1997. 13s See N. Thani, "legal, aspects of the regulatory framework of the Malaysian financial system", PhD thesis, London University, 1993, pp. 353-356.

139 Though, due to falling oil prices, the government of Kuwait may not be prepared to play as a prominent role in bailing out the market as it has done in the past. We now turn into looking at these three jurisdictions in more detail. 14o R. Wilson, Banking and Finance in theArab Middle East, Macmillan, 1983, p. 101. 14� Commercial law in Arab countries is distinguished by offering more flexible rules of evidence, imposing shorter statutory limitations, addressing wider issues in bankruptcy, presuming solidarity among debtors, etc. See N. Saleh, "Financial transactions and the Islamic theory of obligations and contracts" p. 26 in C. Mallat (ed.), Islamic Law and Finance, Graham & Trotman, 1988. 142 See Amiri Decree No. 67 of 1980, Pertaining to Enacting the Civil Code, promulgated in Official Gazette No. 1335, dated 5 January 1981. 143 This law repealed the earlier Law of Commerce (Amiri Decree No. 2 of 1961). See Amiri Decree No. 68 of 1980 Enacting the Law of Commerce. Enacted on 15 October 1980 and came into force on 25 February 1981. See Art. 1. 144 See A. Ballantyne, Legal Development in Arabia, Graham & Trotman, 1980, p. 110. 14s See Art. 1 (2) of the Kuwaiti Civil Code. 14s See for example Amiri Decree No. 38 of 1980, Enacting the Civil and Commercial Procedure Law, promulgated in Official Gazette No. 1307, dated 25 June 1980.

14� See for example, Amiri Decree No. 39 of 1980, Pertaining to Proof (Evidence) in Civil and Commercial Matters, promulgated in Official Gazette No. 1307, dated 25 June 1980. 148 See Ministerial Resolution No. 33 of 1992, Creating Arbitration Bodies, promulgated in Official Gazette No. 50, dated 10 May 1992. 149 See Amiri Decree No. 15 of 1960, Pertaining to Commercial Companies, enacted on 12 May 1960. 150 See W. Ballantyne, Legal Development in Arabia, p. 54. isl Societi Anonyme. isz Societe responsabilite limiti. �s3 Socddte en commandite simple. 154 Sociiti en commandite par action. ass Socidtd en nom collectif. lsb See Art. 4 of the 1960 Kuwaiti Commercial Companies Act (KCCA). 157 See Art. 42 of 1960 KCCA. isa See Arts. 44-55 of the 1960 KCCA. ls9 See Art. 56 of the 1960 KCCA. ibo See Art. 57 of the 1960 KCCA. 161 See Art. 58 of the 1960 KCCA. 'bz See Art. 62 of the 1960 KCCA.

163 See Art. 185 of the 1960 KCCA (as amended by Law No. 28 of 1995, promulgated in the Official Gazette No. 216, dated 23 July 1995). 164 See Art. 186 of the 1960 KCCA 165 See Art. 227 of the 1960 KCCA (as amended by Law No. 28 of 1995, promulgated in the Official Gazette No. 216, dated 23 July 1995). 166 This was Kuwait's first shareholding company, incorporated in 1952. 167 Incorporated in 1954. 168 Incorporated in 1956. 169 Incorporated in 1960. 170 See A. Abdel Hadi, Stock Markets of the Arab World: Trends, Problems and Prospects for Integration, Routledge, 1988, p. 19. 171 Ibid., p. 20. 172 Private Kuwaiti families later held 50 per cent of this initially publicly held company. See Wilson, Banking and Finance in the Arab Middle East, p. 102 1�3 The promulgation of the Kuwaiti Commercial Companies Act in 1960 had a significant impact on the proliferation of Kuwaiti public shareholding companies. See M. Al-Yahya, Kuwait: Fall and Rebirth, Kegan Paul International, London, 1993, pp. 20-21. 1'4 These include Mitsubishi Heavy Industries, Banque Nationale de Paris, etc. 175 See Wilson, Banking and Finance in theArabMiddle East, pp. 107-108. 176 For example, through the subsidised funds provided by the Industrial Bank and the Real Estate Bank.

177 See AI-Yahya, Kumait: Fall and Rebirth, pp. 16-17. 1's See N. Chalk, Fiscal Sustainability with Non-Renewable Renewable Resources, IMF, WP/98/26, Fiscal Affairs Department (March 1998), p. 17. See also generally N. Andrew et al., Kuwait: From Reconstruction ÚI Accumulation ftr Future Generations, IMF, Occasional Paper No. 150 (1997). 1'9 The KIO, however, was superseded by the Kuwaiti Investment Authority, which since 1982 has had overall responsibility for Kuwait's foreign investments. See for example Middle East Economic Digest (London) 14 September 1985, p. 4. ieo The Kuwait Foreign Trading Contracting and Investing Company (KFTCIC), Kuwait Investment Company (KIC) and Kuwait International Investment Company (KIIC) largely executed these operations. See J. Seznec, The Financial Markets af the Arabian Gulf, Croom Helm, 1987, pp. 96-97. 181 Ibid., p. 56. iaz See Art. 306. 183 Art. 323 stipulates that the Stock Exchange is a legal person with a capacity to litigate and dispose/manage its property. 184 See Al-Yahya, Kuwait: Fall and Rebirth, pp. 19-20.

iss Kuwait Foreign Trading Contracting and Investing Company. lab See Seznec, The FinancialMarkets of theArabian Gulf, p. 56. 187 see generally Ministry of Commerce and Industry Resolution No. 61 of November 1976. 188 see Al-Yahya, Kuwait: Fall and Rebirth, p. 20. ia9 These companies where mostly registered in Bahrain or the United Arab Emirates. i9o See Seznec, The Financial Markets of theArabian Gulf, p. 61. t91 Amiri Decree No. 57 of 1982, Pertaining to Forward Rate Dealing in Company Shares, promulgated in Official Gazette No. 1436, dated 20 September 1982. t9z See for example Minister of Justice Resolution Order No. 46 of 1982, Pertaining to the Regulation of the Business of Arbitration Bodies in Regard to Forward Rate Dealings of Company Shares (promulgated in Official Gazette No. 1439, dated 10 October 1982. Amiri Decree No. 59 of 1982, Pertaining to Transactions in Company Shares on the basis of Forward rates and Securing the Rights of Creditors Relevant Thereto (promulgated in Official Gazette No. 1446, dated 28 November 1982.) Council of Ministers Resolution No. 57 of 1982, Regulating Security Instruments of Forward Shares (promulgated in Official Gazette No. 1505, dated 13 November 1982.) Council of Ministers Resolution No. 14/21 of 1983, Pertaining to the Settlement of Forward Dealings in Company Shares (promulgated in Official Gazette No. 1478, dated 23 May 1983.) 193 See for example Arts. 1 and 2 of Stock Exchange of Kuwait Order No. 2 of 1996, Pertaining to Forward Rate Dealings in Company Shares, promulgated in Official Gazette No. 279, dated 20 October 1996.

t94 It is estimated that by May 1983, the Kuwaiti government injected US$2 billion in order to prop up share prices. See Azzam, The Emerging Arab Capital Markets: Investment Opportunities in Relatively Unplayed Markets, p. 194. 195 Ibid. Though government domination over the corporate sector is diminishing as Kuwait is embarking on a privatisation programme. '96 Amiri is an Arabic adjective relating to the royal prerogative issued by the Emir of Kuwait. t9� Amiri Decree Regulating the Kuwait Stock Exchange Market, 1983, promulgated in the Official Gazette No. 1492, dated 14 August 1983. 198 Art. 1. 199 Art. 2. However, Art. 31 of the Ministerial Resolution No 35 of 1983, for some reason, excepts from the definition "inheritance, wills or such other cases as are approved by the market". zoo Ministerial Regulation No 35 of 1983, Pertaining to Enactment of the Bylaws of the Stock Market of Kuwait, promulgated in the Official Gazette No. 1505, dated 13 November 1983. This resolution is subdivided into the following chapters: Ch. 1 (Objective of the market); Ch. 2 (Registration and acceptance of securities); Ch. 3 (Market membership); Ch. 4 (Negotiation of securities); Ch. 5 (Market management); Ch. 6 (Budget and accounts of the market); Ch. 7 (Disputes and arbitration); Ch. 8 (Disciplinary action); Ch. 9 (General and transitory provisions). zot Arts. 5-8. zoz Art. 13. zoa Art. 14. zoa Stock Exchange of Kuwait Order No. 1 of 1984, Pertaining to Rules and Regulations of Dealing in Shares in the Market, promulgated in the Official Gazette No. 1567, dated 8 July 1984. zos Stock Exchange of Kuwait Order No. 2 of 1984, Pertaining to the Formation of an Arbitration Commission and Procedures before it, promulgated in the Official Gazette No. 1583, dated 21 October 1984. 206 stock Exchange of Kuwait Order No. 3 of 1984, Pertaining to the Formation of a Disciplinary Commission and Procedures before it, promulgated in the Official Gazette No. 1583, dated 21 October 1984. Also, Stock Exchange of Kuwait Order No. 1 of 1985, Pertaining to the Formation of a Disciplinary Commission, promulgated in the Official Gazette No. 1595, dated 13 January 1985.

zo� Stock Exchange of Kuwait Order No. 4 of 1985. The Rules for Listing and Dealing in Securities in the Stock Market of Kuwait, promulgated in the Official Gazette No. 1600, 17 February 1985. z°8 Stock Exchange of Kuwait Order No. 16 of 1985. The Conditions for Listing and Regulation of the Work of Jobbers of the Stock Exchange Market of Kuwait, promulgated in the Official Gazette No. 1688, 12 October 1986. z°9 Amiri Decree Regulating Settlement of Stock on the Clearing House of the Stock Exchange of Kuwait, promulgated in Official Gazette No. 1699, dated 28 December 1986. 210 Amiri Decree Concerning Listing of Brokers and Their Assistants on the Stock Exchange Market of Kuwait, promulgated in Official Gazette No. 1574, dated 19 August 1984. See Abdel Hadi, Stock Markets of theArab World: Trends, Problems and Prospects for Integration, pp. 30-31. mz See Amiri Decree No. 31 of 1990, Pertaining to the Regulation of Securities and Creation of Investment Funds, promulgated in Official Gazette No. 1874, dated 6 May 1990. This decree repealed Amiri Deree No. 32 of 1970, Regulating the Negotiation of Companies' Securities and consolidated relevant provisions found in the Commercial Companies Law, the Decree Regulating the Stock Exchange Market, the Decree Pertaining to listing jobbers and their Assistants, the Decree Pertaining to Settlements. (See Preamble to Decree Amiri Decree No. 31 of 1990.) z13 See Ministerial Resolution No. 112 of 1992 Enacting the Implementing Regulations to Decree No. 31 of 1990, Pertaining to the Regulation of Securities and Creation of Investment Funds, promulgated in Official Gazette No. 50, dated 10 May 1992. zi4 See Art. 3 zis See Art. 13, as amended by Ministerial Resolution No. 16 of 1995. 216 See Art. 9 zl See Art. 10 zl8 See Art. 15, as amended by Ministerial Resolution No. 16 of 1995. zi9 However, these rules apply only when "one natural or juristic person owns the bulk shares on the date preceding that of offering them". See Art. 1 of Stock Exchange of Kuwait Order No. 1 of 1996, Pertaining to the Exclusion of Big Quantities of Shares from Certain Negotiation Rules, promulgated in Official Gazette No. 263, dated 30 June 1996.

220 See Financial Systems and LabourMarkets in the Gulf Cooperation Council Countries, IMF, Middle Eastern Department, November 1997, p. 15. zzi Though, in 1981 Kuwaiti regulations allowed for the first time closed joint-stock companies to trade their shares on the official market. zzz See daily Arab stock markets bulletin inAl-Hayat (London) 1 April 1999. zza The market is called El-Wa'ad Financial Investment Service, covering a limited number of stocks on the Kuwaiti Stock Exchange. See Azzam The Emerging Arerb Capital Markets: Investment Opportunities in Relatively Unplayed Markets, p. 188. zza Syria and Lebanon until the late 1940s and Egypt during the late eighteenth century. zzs Known as Law No. 43 of 1976, promulgated in Official Gazette No. 2645 dated 1 August 1968.

z2e This Act which comprised 480 Articles was published in the Official Gazette No. 1910, 30 March 1966. z2� See Aziz Akili, Commercial Companies underJordanian Legislation: A Comparative Study with Company Laws in Irag, Lebanon, SaudiArabia and Egypt, Amman, 1995 at p. 23 (in Arabic). zza The Companies Act No. 12 of the year 1964, all its subsequent amendments, and all other legislation which may contravene were abrogated by Art. 285 of the Companies Act No. 22 of the year 1977 and Art. 320 of the Provisional Companies Act No. 1 of the year 1989. The Provisional Companies Act No. 1 of the year 1989 was published in the Official Gazette No. 3596 dated 1 January 1989. The Companies Act No. 22 of the year 1997 was published on page No. 2038 of the Official Gazette No. 4204 dated 15 May 1997. zzv Arts. 9-10. 230 Arts. 41�8. 23' Arts. 53-76. 232 Arts. 77-89. z33 Arts. 90-203. These forms of companies are also found in company laws in a number of Arab countries including Egypt, Syria, Lebanon and Saudi Arabia. z3' Arts. 204-208. 235 Arts. 209-210.

236 Art. 7. 237 The Central Bank of Jordan Act No. 4 for the year 1959 mandated that a central bank should be established. In addition, the Jordanian government also issued the Supervision of Banks Act No. 5 of the year 1959 extending the supervisory role of the CBJ to all other operating banks in Jordan. z3s An these acts were published in the Official Gazette No. 1413 issued in April 1959. However, this Act was amended by the Act No. 33 of the year 1960. z39 The CBJ demands that commercial banks invest at least 20 per cent of their paid-up capital and reserves in stocks, 4 per cent of their deposits in bonds of public holding companies, and 4 per cent of their deposits in government bonds and bills. z4o The CBJ has also been instrumental in setting up the Housing Bank, which is the largest bank in Jordan specializing in giving loans for housing purposes. The CBJ has also been instrumental in setting up the Jordanian pension fund The Social Security Corporation. z4� For example, from 30 December 1995 the CJB raised the level of credit facilities granted to individuals for investment in the AFM from JD 150,000 to JD500,000. With regard to corporations and other juristic legal personalities, the ceiling was raised from JD300,000 to JD1 million. Though, should the amount requested exceed the JD150,000 or JD300,000, the prior consent of the CBJ is required. See the Central Bank ofJordanAnnual Report, No. 31 for the year 1994, p. 48. 242 See P. Cashin et al., Informational Efficiency in Developing EguityMarkets, WP/95/58, Research Department and Middle Eastern Department, IMF (June 1995), p. 3. za3 By the end of die same year (1982), the parallel market was capitalized JD16 million.

z4' These Directives comprise 39 articles. Part One defines a number of terms including "The regular market", "The parallel market", "The trading floor", "Delisting" and "Suspension". These directives also deal with "Listing requirements for public shareholding companies at the regular and parallel markets" (Part Two), "Transfer and delisting of public shareholding companies at the regular market" (Part Five) and "Suspension of public shareholding companies from the parallel market and the regular market" (Part Six). z4s Issued in accordance with Arts. 3 and 87 of the Articles of Association of the Amman Financial Market. These Rues comprise over 255 articles. Part One deals with definitions. Part Two deals with procedures for trading in financial papers on the floor of the market. Part Two is subdivided into three chapters and thirteen sections dealing with: management and administrative procedures, execution procedures and procedures for follow-up on the execution of purchase and sale orders. Part Three deals with "Procedures regarding the transfer of title and the trading of financial papers outside the market floor" Part Three is subdivided into two chapters and four sections dealing with transfer of title of financial papers which are not subject to trading on the market floor through the legal department and trading in shares issued by companies which are not listed on the market. Part Four deals with "Settlement procedures", subdivided into 4 chapters dealing with settlement procedures between brokers, settlement procedures for returned agreements, settlements' procedures between brokers and clients and settlement procedures between brokers and the AFM. z46 Known also as the Internal Regulations of the Amman Financial Market, which were issued in accordance with Arts. 34 and 51 of the Amman Financial Market Act No. 31 of the year 1976. These Regulations comprise eighty-seven articles. Part One deals with various definitions. It defines financial paper as "negotiable shares, bills and bonds issued in the Kingdom by the government, governmental institutions, municipalities, or public and private Jordanian shareholding companies, or any other negotiable financial papers". It also defines securities transactions as "buying and selling financial papers directly or through brokers". Part Two deals with the "Management of the AFM". Part Three deals with "Membership", "Duties of public shareholding companies" and "Conditions for membership of public shareholding companies". Part Four deals with "Brokers" and "Conditions of admission". Part Five deals with "Functions of brokers", "Duties and rights of brokers", "Actions by persons and Brokers" and "Securities transactions on the floor". Part Six deals with "Market resources", "Membership and brokers fees" and "Market commissions". Part Seven deals with "The general assembly". Part Eight deals with "Authorities of the disciplinary council". z4� This draft comprises 38 articles. z4s Art. 77 of this Act abrogates (after the passing of the specified period mentioned in Art. 73) the Amman Financial Market Law No. 1 of the year 1990 and all its amendments. In addition, Art. 80 also abrogates all other laws and regulations which may contravene this Act. z49 Arts. 29-34. However, Art. 7 states that the Jordanian Securities Commission shall regulate and monitor issuance and dealing in securities and monitor business operations of entities which fall under its supervision. In addition it shall regulate disclosure of information

cant. concerning securities and issuers and dealing of insiders, and regulate public tenders to purchase joint stock companies. However, Art. 20 states that the following are subject to the monitoring of the SEC: the Exchange, The Securities Deposit Centre, financial services companies, joint stock companies, investment funds and certified financial professionals. zso Arts. 35-43. Art. 35 states that financial services companies can invest as trustees, practice investment management, engage as financial advisors and financial brokers. They may also manage primary issues. zsi Arts. 44-52. Art. 46, however, divides investment funds companies into "variable-capital investment funds" (open-ended), or "fixed-capital investment funds" (closed-ended.) Art. 50, states that an "investment company" means a public joint stock company which primarily undertakes or intends to undertake the business of investing and trading in securities, or owns or intends to own securities equal in value to more than 50 per cent of its total assets. The definition also excludes banks, insurance companies, financial services and holding companies. zsz Arts. 53-66. Art. 55 stipulates that an issuer or an affiliate of an underwriter may not sell a security before the approval of the prospectus. Art. 56 states that the prospectus shall contain the following: adequate description of the issuer, adequate description of the security, the financial position of the issuer and any other information required by the SEC or authorized by it. zsa Arts. 67-72. Art. 67 defines inside information as any information which has not been made public and that if advertised is expected to affect the price of one security or more. Art. 68 prohibits insiders including members of the Board of Directors of the SEC, and members of the Securities Deposit Centre and the executive managers and staff to exploit inside information. Paragraph (d) also prohibits a number of practices. These include giving the public a false information of real or fictitious dealing in securities, to influence the prices of securities and adversely affect the capital market in any shape or form. Art. 70 imposes hefty penalties on violations of the provisions of the Act. Such penalties vary between up to JD 20,000 and/or of a fine no less than twice and not more than five times the profit made or loss avoided by the violator. In addition to the fine, violators of Art. 68 can expect an imprisonment sentence of up to three years and up to one year for violating provisions 35(b), 36(b) and 45(c). zs4 For an exhaustive account of Oman's economy and prospective growth, see generally World Bank, Report No. 12199-OM entitled Sultanate of Oman: Sustainable Gromth and Economic Diversification (May 1994). zss Sources of law according to the Ibadi sect are the Qur'an, sunnah (the prophet's deeds and unspoken approvals), ijma` (consensus of opinion), qiyas (analogy) and istidlal (juristic reasoning). See N. Saleh, The General Principles of Saudi Arabian and Omani Company Laws: Statutes and Shari'a, Namara Publications, London, 1981, pp. 28-31.

zsb See A. Hirst's introduction to Business Laws of Oman, Graham & Trotman, 1988, p. 1.0-4. zs� See Saleh, The General Principles of Saudi Arabian and Omani Company Laws, p. 32. 258 Law No. 4/74 of May 15, 1974. Promulgated in Official Gazette No. 56 dated 1 June 1974. zsv Ministerial Resolution No. 121/86, promulgated on 29 December 1986 implemented this law. zbo Issued on 19 September 1981. 261 See Art. 28 of Omani Commercial Companies Act (OCCA). zbz See Art. 46 ibid. 263 See Art. 51 ibid. 264 See Art. 56 ibid. zes See Art. 136 ibid. zse See Art. 3 ibid. 267 See Art. 85 ibid. z6R See Art. 86 ibid. z69 See Azzam, The Emerging Arab Capital Markets: Investment Opportunities in Relatively Unplayed Markets, p. 169.

z�o However, the presence of local and international institutional investors is less in Arab securities markets (partially due to restrictions imposed on nationality), which has effectively meant that unit trust schemes have become popular. 271 I.e. listing rules, mechanisms of share offering, regulation of brokerage and securities firms, fmancial intermediation, regulation of fraud, etc. In this respect, (as was mentioned in the previous chapter) another area that would benefit greatly from a comparative legal examination would be civil remedies available for fraudulent activities and insider dealing, especially given the heavy reliance of Arab legislators on often-ineffective criminal law approach.

272 These mainly comprise multi-listing agreements inside the Gulf Co-operation Council. z�3 See L. Al-Rimawi, "Jordan's Association Agreement with the European Union: Comment", Yearbook of Islamic and Middle Eastern Law, vol. 4, p. 486. z�4 See Norton and Sarie-Eldin, "Securities law models in emerging economies", pp. 339�41. 275 See generally, M. Moran, The Politics of the Financial Service Revolution: The USA, UK and Japan, Macmillan, London, 1990. 276 Well-known historical English examples in this sense are the 1697Act to Restrain the Numbers and Practices ofBrokers and StockJobbers (passed after the damning report of the Royal Commission of Trade in England) and the 1720 Bubble Act (enacted after the collapse of the share price of the South Sea Company). See G. Gilligan "The origins of UK fmancial services regulation", The Company Lauryer, vol. 18, no. 6, 1997, pp. 171-174. See also generally G. Robb, Wbite-Collar Crime in Modern England: Financial Fraud amd Business Morality, 1845-1929, Cambridge University Press, 1992. 277 The financial self-regulatory system of the City of London is also often attributed historically to decentralization and lack of strong state interference. In more recent times, however, the lobbying efforts of City professionals, its developed internal structures which were averse to public models in regulation, together with its unique links with the Treasury and the Bank of England, have all helped maintain the City's regulatory independence. See Gilligan, "The origins of UK financial services regulation", pp. 167-174. See also C. Goodheart, "Structural Changes in the British Capital markets" in C. Goodheart et al., The Operation and Regulation of Financial Markets, Macmillan, London, 1987, pp. 32-36. z's See Gilligan, The origins of UK financial services regulation", p. 169.

z�9 For the impact of the Big Bang on regulation in the UK see for example, L. Gower, "Big bang and city regulation" ( 1988) 51 Modern Law Review. See also on UK financial regulation generally, B. Rider et al., Guide to the Financial Services Regulation. CCH Publications, 1997. For general books on the subject of securities regulations see L. Loss, Fundamentals of Securities Regulations, Little Brown, Boston, 1983. However, following the institutionalisation of the ' FSA, SROs are expected to continue their regulatory responsibilities until the regulation transferring their responsibilities to the Financial Services Authority becomes a law in early 2000. See CCH Financial Services Newsletter, No. 4, April 1998, p. 1. 280 See for example Blommestein, The Rnle of Financial Institutions in the Transition to a Market Econamy, p. 3, and generally Norton and Sarie-Eldin, "Securities law models in emerging economies", and B. Rider, "Blindman's bluff: a model for securities regulation", p. 351, in J. Norton and M. Andenas, Emerging FinancialMarkets and the Role of International Financial Organisations, Kluwer, 1996. z8� See A. Watson, Legal Transplants: AnApproach to Comparative Law, University of Georgia Press, 1993. His most salient example was Turkey's adoption of the Swiss Civil Code, largely due to its minister of Justice having studied law in Switzerland, pp. 115-116. zsz See Norton and Sarie-Eldin, "Securities law models in emerging economies", p. 440. zsa See generally J. Heimann, "Global institutions, national supervisions and systemic risk", Financial Stability Review, No. 3, pp. 82-91 (Autumn 1997). See also M. Knight, Developing Countries and the Globalizatian of Financial Markets, Monetary and Exchange Affairs Department, IMF, WP/98/105 (July 1998), p. 25. 284 See M. Kumar et al., Emerging Equity Markets in Middle Eastern Countries, Middle Eastern and Research Departments, IMF, WP/94/103 (September 1994) p. 14.

285 Such regional and international cooperation is, however, more prominent especially when confronting cross-border market manipulation. See OECD Documents (1993). 286 For example the International Organization of Securities Commissions (IOSCO), established in 1986 with its membership comprising official securities markets' regulators from developed and developing countries. It strives to enhance the international integration (and harmonization) of domestic securities markets. See generally G. Underhill, ICeeping Governments out of Politics: The Internationalisation of Securities Markets and the Question of Regulation, Working Paper No. 118, University of Warwick (August 1993). 287 See generally P. Alonso-Gamo, Glabalisation and Growth Prospects in Arab Countries, Middle Eastern Department, IMF, WP/97/125 (September 1997). However, such internationalization is taking place through cross-regional listings arrangements, listings of American depository receipts (ADRs) and global depository receipts (GDRs) in domestic equities, giving foreign investors and fund managers substantially freer access to domestic securities markets, etc. zsa It is estimated that in the last few years Islamic banking has grown by an average of 15 per cent per annum and that market size is projected to reach US$100 billion by 2000. Moreover, 84 developing and emerging countries are, in varying degrees, now involved with Islamic banking. See Errico, Islamic Banking: Issues in Prudential Regulations and Supervision, p. 4.