14 March 2017
KUALA LUMPUR – Established in 1983, IOSCO members from over 115 jurisdictions, oversee capital markets worth about USD140 trillion, and collectively regulate more than 95% of markets worldwide.
The chairman of Securities Commission (SC) Malaysia, Tan Sri Ranjit Ajit Singh in his speech that IOSCO was undoubtedly a highly significant organisation, and represented to capital markets and capital market regulators what the Basel Committee on Banking Supervisors (BCBS) was to banking regulators and banks.
“As part of its strategic vision, IOSCO has recognised the significance of having regional presence and the need to expand its reach to respond to the growing demands and interests of its wide membership.
“Given an increasingly complex market environment, growing financial innovation and rapidly expanding cross-border activity, the Asia Pacific Hub will enable IOSCO to leverage on regional expertise and infrastructure and scale up its efforts to provide more targeted solutions to serve the needs of the region.
“In this regard, the SC is delighted to host the very first regional hub of IOSCO,” he said during the IOSCO launching today at the conference hall of SC Malaysia.
He said further that the selection of Malaysia as the first location outside the IOSCO headquarters in Madrid, demonstrates the conduciveness of the overall environment and ecosystem of the country in supporting the establishment of international organisations and entities.
“It reinforces Malaysia’s efforts in building a high quality and well-regulated capital market, and a reflection of the SC’s commitment in facilitating greater cross-border collaboration.
“The SC since very early on has played an active role in global regulation and has recognized the importance of participating in organizations like IOSCO which play an active role in shaping the global regulatory and market architecture.
“The Asia Pacific Hub is expected to play a key role in helping build the region’s capital markets (both individually and collectively), address regulatory gaps and strengthen the overall implementation of global standards in the region,” he said.
Subsequently, it would also contribute to strengthen the voice and priorities of the region in the international financial agenda. The Hub would also foster greater connectivity and inclusiveness and encourage greater cross border coordination and collaboration.
Through its initiatives, Ranjit spoke that the Asia Pacific Hub would facilitate greater cross border regulatory cooperation and promote the transfer of knowledge, expertise and best practices from across IOSCO’s wide membership, which would contribute to overall efforts to strengthen the resiliency of the region’s capital markets.
“Global paradigms have changed, and we are now regulating in what has been described as the new abnormal.
“The sharp pace of technological innovation, the surge of economic nationalism and the proliferation of competitive deregulation is challenging the fabric of modern capital markets and impacting global regulatory and market equilibrium.
“As the world’s capital markets today make up more than half of global financial assets, and the shift towards market based financing becomes all the more pronounced, policy paradigms must also reflect the new reality,” he said.
While, a global approach to consistent regulation is a focus post the global financial crisis, recent geopolitical changes have brought uncertainty into global regulatory system and unpredictability in the macro-policy environment.
Although the extent of financial deregulation remains uncertain, this potential shift raises concerns of regulatory arbitrage which can thrive in an uncertain market environment.
“Intense competition for deal flows and resurgence of economic nationalism may also hasten the fragmentation of regulation and lead to widespread competitive deregulation.
“Amidst a connected, complex and global marketplace, the increase in digital innovation can also pose challenges.
“Regulators will need to reassess their supervisory approach and expertise given that existing supervisory practices are largely predicated on human interface. Digital markets can also heighten potential transmission channels for vulnerabilities,” said Ranjit.
He told that cyber risk is now a transnational concern, which therefore makes the sharing of information and cross border cooperation absolutely imperative in increasing cyber resilience of our markets.
“While, we are navigating this new abnormal, we must also not lose sight of the need to reinforce good conduct and behaviour as misconduct risks continue to threaten the integrity of global markets. Corporate culture, board effectiveness, sales practices and the alignment of incentive structures are critical in ensuring fair outcomes to investors.
“In this new environment, we will undoubtedly need to remain agile and innovative. This will require continuous reassessment of our approaches and capabilities in safeguarding investor trust and confidence while addressing vulnerabilities in our markets.
“The ongoing dialogue among regulators must also continue to generate well-considered international efforts to reduce contagion risks. The global regulatory community must ensure that regulatory policies adopted promote fair, efficient and transparent markets and support capital formation while minimising the unintended consequences of regulation,” he said.
In this regard, IOSCO is well placed to promote a collaborative approach with industry which will drive the growth of sustainable capital markets.
“Given the issues that will be discussed and the participation of high quality speakers at the conference, I trust that we will gain greater insights to meet the ongoing and emerging challenges,” said Ranjit.
The three-day conference is joined by representatives from over 30 countries.
Present to launch the IOSCO was the prime minister, Datuk Seri Najib Razak, the IOSCO Board Chairman, Ashley Alder and the newly appointed IOSCO Secretary General, Paul Andrews.