Abstract
It is widely shared, especially among Italian lawyers, the view that financial regulation
interferes with contract law in order to correct asymmetric information. This
article shows, instead, that financial regulation interferes with a large part of the
contracts used in financial markets in order to govern third-party effects of those
contracts. The article analyzes some of the contracts where those third-party effects
are present and how regulation tackles the problem of contract extension. The article
shows that there are new contracts where the problem arises, e.g. the market
maker or the liquidity provider contract. Accordingly, the article offers a completely
different perspective on a significant part of the interaction between financial regulation
and contract law.
It is widely shared, especially among Italian lawyers, the view that financial regulation
interferes with contract law in order to correct asymmetric information. This
article shows, instead, that financial regulation interferes with a large part of the
contracts used in financial markets in order to govern third-party effects of those
contracts. The article analyzes some of the contracts where those third-party effects
are present and how regulation tackles the problem of contract extension. The article
shows that there are new contracts where the problem arises, e.g. the market
maker or the liquidity provider contract. Accordingly, the article offers a completely
different perspective on a significant part of the interaction between financial regulation and contract law.