Asia-Pacific securities regulators reinforce commitment to co-operation and effective supervision of markets

Securities regulators from the Asia-Pacific region, at their first meeting for the year in Colombo, reinforced their commitment towards regional cooperation and effective supervision of markets to enhance investor confidence, particularly in light of the current global market conditions.

The meeting of the Asia-Pacific Regional Committee (APRC) of the International Organisation of Securities Commissions (IOSCO) was hosted by the Securities and Exchange Commission of Sri Lanka (SECSL) on 24 January 2003. The meeting was preceded by an inauguration ceremony that was officiated by the Minister of Finance of Sri Lanka, the Hon. K.N. Choksy P.C, on the evening of 23 January 2003.

The APRC Chairman, Datuk Ali Abdul Kadir, who is also the Chairman of the Securities Commission of Malaysia, acknowledged the challenges that markets face in the midst of uncertain global conditions and underlined the need for securities regulators to be highly vigilant and responsive in order to minimise the impact of such risks.

“(Securities regulators) must be better able to identify, assess and respond to risks facing our markets in the future and to cooperate together in managing and minimising any negative impact such risks may have on our markets,” said Datuk Ali.

In line with the commitment to enhance regional regulatory cooperation and collaboration, the SECSL took the opportunity to enter into a memorandum of understanding with the Securities and Exchange Board of India.

Effective supervision and enforcement of securities laws was also recognised as an essential component of a sound regulatory framework that could earn investors’ confidence and enhance the attractiveness of a market as an investment destination.

“An effective supervisory and enforcement regime must be present within the capital market regulatory framework…and this can contribute to the attractiveness of a market”, Datuk Ali said.

Other highlights of the APRC meeting included discussions on the implications of technology-facilitated cross border trading, and the regulatory approach regulators should take as well as deliberations on the issue of investor protection, which was stressed as being “one of the pillars” of capital market regulation. Datuk Ali stressed that “investor protection deserves every commitment from member regulators”.

The regional regulators also discussed issues relating to corporate governance and examined regional experiences at enhancing standards of corporate governance in member jurisdictions.

The APRC Enforcement Directors also met concurrently in Colombo, chaired by Dr. Dayanath Jayasuriya of the SECSL. At this meeting, members discussed recent developments on cross border trading and cold calling schemes, a phenomenon that had adversely affected investors in the region since late 2001.

This gathering of the region’s senior capital market enforcement officials presented the ideal opportunity for the discussion of various enforcement strategies to combat market misconduct. Related to this, the use of civil or criminal actions was discussed and it was stressed that in appropriate cases, civil remedies can be an effective mechanism.

The enforcement directors noted that effective regulatory cooperation had resulted in several successful raids on operators of these schemes and joint efforts in alerting investors to the risks of investing in such schemes. The need for investor education and a rapid alert system was also advocated by several enforcement directors.

The APRC, one of the four regional committees of IOSCO, consists of 22 member agencies from 19 jurisdictions namely Australia, Bangladesh, China, Hong Kong SAR, India, Indonesia, Japan, Malaysia, Korea, Kyrgyz Republic, New Zealand, Pakistan, Papua New Guinea, Philippines, Singapore, Sri Lanka, Chinese Taipei, Thailand and Vietnam. Datuk Ali has been the APRC Chairman since May 2000.

IOSCO, which now has a membership of 177 member agencies, is the leading international forum for securities regulators that addresses issues and demands relating to the regulation of securities and futures markets.

27 January 2003