Regulating Business in Cyberspace

The attractiveness of selling financial services online is undeniable. The intangible nature of financial products sits well with the versatile new medium of the Internet. The ability for businesses to access a broader base of customers across numerous jurisdictions is appealing. The internet offers financial service providers numerous advantages over traditional business methods including reduced costs, cross-selling, access to global markets, increased competition - the list goes on and on.

The commercial advantages presented by the Internet are, however, clouded by the legal and regularity uncertainly. The Internet makes geographical boundaries, the cornerstone of the current regulatory approach, non-existent. This presents financial services companies, regulators and legislators with fundamental problems in determining the governing law for financial services and how to regulate and how to enforce regulation.