Introduction to the International Capital Markets

This Treatise covers all the basic legal concepts underlying international capital markets (or securities) regulation (with special emphasis on the European Union and on the United States). Its aim is to familiarize university students and practitioners with all or almost all products and practices (including the most recent developments) in the markets, from "hedge funds" and other types of funds to "derivatives" to "securitization" to "credit default swaps" to the regulation of financial institutions "too big to fail." At the same time, it studies the lessons learned from the 2007/2008 Financial Crisis and the steps taken and to be taken to prevent the recurrence of such a crisis. While this work deals with the past, it also looks to the future. 2017 will probably be the year of the greatest changes that have ever occurred in capital markets regulation. The regulations will change as a result of (i) "Brexit" (the decision taken by Great Britain to leave the European Union) and the striving of other nations to loosen EU rules and (ii) the calls for regulatory reform expressed by voters in key countries, e.g. at the U.S. elections, as well as at referenda in the U.K., and Italy respectively. As just one example, the two years of negotiations between the U.K. and the E.U. commencing after formal notice of Brexit has been given will undoubtedly alter the obligations of departing countries to comply with and their entitlement to continue to retain benefits obtained under existing EU Directives. The past, however, will be the basis for the future. While the impending changes will be significant and will require practitioners to re-learn the applicable rules, they will be based on the principles embodied in the EU Directives and the U.S. securities laws as well as the vast amount of published interpretations to implement those principles. The aim of capital market regulations will remain the same: the protection of investors and the maintenance of the integrity of international markets in order to avoid the impact of adverse effects on the economies of individual countries and the world economy. The author, Blaise Pasztory emigrated from Hungary as a child and graduated from Harvard College and Harvard Law School. In his over 50 years of practice as a securities lawyer in New York, he has assisted, among others, in the setting up of the very first hedge fund, and has gathered a vast amount of experience. A regular speaker across two continents and an honorary professor of ELTE Law School in Budapest, Hungary, he hopes that this work will remain useful not only in the next year or two but for the longer term, as the inevitable continuing changes in the rules are supplemented in the text.