Global regulators cannot adopt one-size-fits-all rules and practices as they react to the financial crisis, but it is possible to have common principles, a top Japanese regulator said Wednesday.
Other market watchdogs and industry members at a conference here echoed basic calls for more coordination as lawmakers draw up new rules to avoid a repetition of the bruising 2007-2009 crisis and resulting recession.
“In any crisis, national opinion or the mindset of regulators swings from this end to that end so quickly, and probably goes too far,” said Masamichi Kono, the vice commissioner for international affairs at Japan’s Financial Services Agency.
Kono warned about rules that are “too prescriptive” and “one-size-fits-all,” as pressure builds to follow the lead of the United States and Europe.
“Fortunately or unfortunately — history will tell — we see so many national initiatives not necessarily coordinated …,” he told the International Organization of Securities Commissions meeting.
Banks, hedge funds and credit ratings agencies all face significant rule changes, as well as accounting standards and the global market for trading complex derivatives, once new legislation is adopted.
“With markets being integrated, products being integrated and players being integrated, there is a need to come to a common approach among regulators,” Nehal Vora, head of planning and policy at the Bombay Stock Exchange, said in an interview.
“More and more integration, sharing information and working in a concerted effort in the areas of regulatory cooperation is required.”
“Conference participants also stressed the need for lawmakers to work more closely with regulators and for the industry to get new rules right.
“We do see around the world the legislative process slightly on its own with a set of objectives,” Deven Sharma, president of Standard & Poor’s, told the meeting. “And while the intent is very good and very clear, it’s not clear that the same knowledge of markets the same knowledge of functioning and requirements are brought to bear when the legislation is passed.
“We collectively need to persuade the legislators to engage in this process with a little bit more uniformity.”
(Reporting by Jonathan Spicer and Jennifer Kwan; additional reporting by Rachelle Younglai; editing by Andre Grenon)
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