02023cas a2200289 a 4500 AALejournalIMF013353 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475516784 1018-5941 BD-DhAAL BD-DhAAL Caglio, Cecilia. Competition among Exchanges and Enforcement Policy / Cecilia Caglio, Andrea Pescatori. Washington, D.C. : International Monetary Fund, 2013. 1 online resource (31 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In this paper, we explore how competition among stock exchanges, operated as self-regulatory organizations (SROs), affects the design of their members' surveillance. We develop a model where two for-profit SROs compete for trading volume, while brokers execute transactions on behalf of the investors and may misreport the true cash flow. The SROs can deter a fraud by announcing an investigation and imposing a monetary penalty.The success of the investigation depends upon both the amount of resources devoted to monitoring and the efficiency of monitoring technologies. We show that when contracts are incomplete and investors do not have perfect information about the monitoring efficiency, competition among exchanges induces a race to the bottom in enforcement policy and a reduction in total welfare, compared to the case of a monopolist SRO. Mode of access: Internet Cash Flow imf Expected Return imf WP imf Pescatori, Andrea. IMF Working Papers; Working Paper ; No. 2013/037 Full text available on IMF http://elibrary.imf.org/view/journals/001/2013/037/001.2013.issue-037-en.xml IMF e-Library