How DBR Affects You
What is MBR?
Another common acronym often heard in conjunction with DBR is MBR, which stands for “merit-based regulation”. In contrast with DBR, which emphasises disclosure, MBR emphasises on the regulatory authority assessing the quality and merits of an issue of securities.
Here is an analogy of how it works in a DBR and MBR environment. If someone wants to sell a car in a MBR regime, the regulator will check to make sure that the car is in good condition and is saleable. The regulator then gives approval for the car to be sold in the market. In a DBR regime, even if the car has only three wheels and the steering wheel is missing, as long as minimum standards are met and so long as its condition is fully disclosed to the public, the car may be sold in the market. The premise is on the fact that the buyer or investor is fully informed of the condition of the car. It is caveat emptor, which means, let the buyer beware.
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