Transcript No Slide Title

Promoting Fair and Transparent
Regulation in Securities Markets
A Presentation to the APEC-OECD
Co-operative Initiative on
Regulatory Reform
Singapore February 2001
What Is Transparency?
“Transparency relates to the openness and impartiality
of decision making in the design, introduction,
administration and enforcement of new or amended
regulations.”
OECD Working Party of the Trade Committee,
“Strengthening Regulatory Transparency,” April 12, 2000
Why Transparency?

Transparent and fair regulatory systems are
essential to the development of deep and
liquid capital markets.

A system of regulation that is transparent to
market participants instills the confidence
needed to attract suppliers and users of
capital, improves market efficiency, and
contributes to increased overall economic
activity and investment.
Promotion of Transparency Does ….

Enhance Articulation of Regulatory
Objectives

Improve Regulation Through
Practitioner Input

Provide Better Business Predictability

Foster More Efficient Markets

Increase Public Trust and Confidence
Promotion of Transparency Does Not ….
 Prohibit Adoption
or Enforcement of
Regulatory Actions Based on:
– Prudential Concerns
– Legitimate Public Policy Objectives
Improving Regulatory
Transparency Is a Global Effort

APEC

OECD

EU

IMF

WTO

IOSCO
IOSCO Objectives and Principles
of Securities Regulation

6.5 Clear and Consistent Regulatory Processes
– Processes Which Are:




–
consistently applied
comprehensible
transparent to the public
fair and equitable
In Formulation of Policy:


process for consultation with those affected
public disclosure of policy in important operational
areas generally desirable.
Principles of Fair and Transparent Regulation

Complement IOSCO’s work

Broadly applicable to all financial services
firms in global capital markets

Five guiding principles
Principles of Fair and Transparent Regulation - 1
1. Rules, regulations and licensing requirements
should be considered and imposed, and
regulatory actions should be taken, only for the
purpose of achieving legitimate public policy
objectives that are expressly identified,
including, for example, investor protection,
maintaining fair, efficient, and transparent
markets, and reducing systemic risk.
Principles of Fair and Transparent Regulation - 2
2. Fair And Non-Discriminatory Enforcement
– Regulations and regulators should not discriminate
among licensed market participants on the basis of the
nationality or jurisdiction of establishment.
– The relationship between a regulator and a licensed
market participant should be governed by the standards
set forth in relevant rules and regulations.
– The introduction of new securities products and services
by firms should be governed by the standards set forth in
relevant rules and regulations.
Principles of Fair and Transparent Regulation - 3
3. Regulations should be clear and understandable.
Principles of Fair and Transparent Regulation - 4
4. All regulations should be publicly available at
all times.
Principles of Fair and Transparent Regulation - 5
5. Regulators should issue and make available to
the public final regulatory actions and the basis
for those actions, in order to enhance public
understanding thereof.
Regulatory Transparency in Japan
“Ensuring transparency and fairness in financial
administration based on clear rules, market
discipline and the principle of self-responsibility.
The FSA is committed to achieving transparent and fair financial
administration in every respect under clear rules based on market
discipline and the principle of self-responsibility.”
Statement by the Commissioner on the Establishment
of the Financial Services Agency - July 3, 2000
Measures to Improve Administrative and
Regulatory Procedures in Japan

Administrative Procedures Act
– Effective April 1994

Public Comment Procedures
– Adopted March 1999

No Action Letter System
– Adopted July 2000

Information Disclosure Act
– Effective April 2001
Next Steps

Private Sector Dialogue with IOSCO

Review and Adoption by Key IOSCO Committees:
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SRO Consultative Committee
Executive Committee
Technical Committee
Emerging Markets Committee

Enhanced GATS Transparency Provisions
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Review and Adoption in Other International Fora
Summary

Growing global recognition of the importance of
regulatory transparency in the financial sector

Implementation of international transparency standards
materially improves regulatory efficiency and market
performance, while allowing regulators flexibility to
address prudential and legitimate public policy
objectives

Guiding principles of fair and transparent regulation
have global application

Important to continue business/regulator dialogue across
broad range of fora

Establishing meaningful regulatory transparency is a
difficult, continuous process of trail, error and
refinement - but well worth the effort