"Disclosure to regulators and the market must be considered in order to improve information flows on the activities of these hedge funds," said Encik Ali.

Encik Ali also noted that the Chairperson of the Commodity Futures Trading Commission (CFTC) of the United States of America (USA), Ms. Brooksley Born, reflected a similar position during her remarks at the IOSCO meetings.

According to the SC Chairman, the CFTC Chairperson mentioned that the President's Working Group on Financial Markets had issued a report in April 1999 arguing for the need to ensure increased transparency and disclosure on the activities of hedge funds and other HLIs, as well as greater constraints on excessive leverage.

The SC Chairman added that it is insufficient to only introduce requirements on regulated intermediaries to strengthen risk management processes at these firms as they may be acting as counterparties to hedge funds and other HLIs.

"Direct regulation on hedge funds will also be necessary to ensure a fairer and more transparent international financial system.

"It is unlikely that the types of concerns that occurred during the Asian crisis will be alleviated unless efforts at direct regulation are introduced," said the SC Chairman.

The SC also pushed for the need to ensure that the newly formed Financial Stability Forum (FSF) included representatives of emerging market jurisdictions, given the significance of their work to emerging market countries.

The FSF was established by the G-7 Finance Ministers and Central Bank Governors at their meeting in Bonn last February to promote information exchange and co-ordination among national authorities and international groupings with responsibilities relating to international financial stability. Initial membership of the FSF comprises G-7 financial regulators and representatives from various international organisations.

The SC is a member of the IOSCO Task Force on Hedge Funds and HLIs, which is currently examining the issue of appropriate transparency and disclosure standards for such institutions. The SC is the only emerging market jurisdiction in the task force and represents the Emerging Markets Committee (EMC). The EMC has over 60 emerging market countries as members.

The IOSCO annual conference held in Lisbon over May 22-28 brought together the heads of capital market authorities from over 90 countries. Malaysia was represented by the Securities Commission. Notable speakers at the conference included Michel Camdessus, the Managing Director of the IMF, Willem Duisenberg, the President of the European Central Bank, and Andrew Crockett, the Chairman of the FSF. The meetings were opened by His Excellency, the Prime Minister of Portugal, Mr. António Guterres.