New Governance scholarship has made important theoretical and practical contributions to a broad range of regulatory arenas, including securities and financial markets regulation. In the wake of the global financial crisis, question about the scope of possibilities for this scholarship are more pressing than ever. Is new governance a full-blown alternative to existing legal structures, or is it a useful complement? Are there essential preconditions to making it work, or can a new governance strategy improve any decision making structure? If there are essential preconditions, what are they? Is new governance “modular” – that is, does it still confer benefits when applied partially or imperfectly, or does it fail to achieve good regulatory results unless all the elements are in place? This article starts from the conviction that new governance is a promising response to the fluidity and complexity of contemporary regulatory environments. It then draws on three essentially unhappy narratives from recent financial markets regulation (around securities law enforcement, capital adequacy, and the impact of securitization), in an attempt to identify lessons for new governance scholarship at the level of practical implementation. These are not narratives about the failure of new governance structures. However, central to each narrative are components, or incomplete versions of components, that are also central to new governance structures. The paper considers the significance of incrementalism, regulatory capacity, and destabilization and complexity for regulatory design. It closes with some preliminary recommendations for making new governance structures effective, even as implemented by flawed human actors
