Regulatory response to the Financial Crisis
Speaking notes from Tony D'Aloisio, Chairman, ASIC, for speeches to the Asia Securities Forum Sydney, 12 October 2009, Sydney, and the CPA Congress, 15 October 2009, Sydney.
I am going to talk about the global regulatory agenda which has arisen out of the financial crisis and its implications for Australia.
As all of you know better than most, the global financial crisis (GFC) is already bringing about changes in the international regulatory landscape. The rules of the game are changing and those changes will shape the future of the financial markets (in which we all operate).
Today, I am going to briefly outline the international changes that are underway. Then in order to give you a better understanding of the reform process, I'll provide some insights on the dynamics behind those changes.
But importantly, I am going to go on to talk about whether something more fundamental may need to happen in the approach to reform to ensure that the right balance is struck and maintained between efficiency and investor protection. I am going to argue that the way to maximise our chance of getting this balance right (as we respond to the GFC) is to agree a conceptual framework against which to measure the reforms. Such a framework requires an analysis of the philosophical or economic underpinning of the current regulatory framework, and that this in turn means taking a fresh look at how the market works and our assumptions about market efficiency.
Now you may be thinking that's all fine internationally, but what does that all mean here in Australia? In the final part of my presentation, I will focus more specifically on the implications of these global changes for Australia.
As head of ASIC, understandably my focus is on the securities and investments markets and that will be my main focus today. Regulatory changes from the GFC go beyond securities and investment markets. They cover prudential and risk management practices for the major banks and financial institutions. In Australia, regulation in these areas is primarily a matter for the Reserve Bank of Australia (RBA) and Australian Prudential Regulation Authority (APRA) and Treasury.
This is a good time to outline what is going on globally, as we had the recent G-20 meeting in Pittsburgh and, last week, major meetings of the International Organization of Securities Commissions (IOSCO) in Basel. I will start with five specific areas.