International engagement improves markets regulation
Published by the Australian Financial Markets Association in the Policy and Markets Brief, May 2016.
Many Australian financial market participants undertake cross-border transactions. A corollary of this is that global participants are also active in our markets. Grappling with the impact of international regulation is a reality for these businesses, as well as for ASIC, which must understand and respond to domestic events against a backdrop of global market and regulatory developments. One of the ways we inform our global perspective is by engaging with overseas regulators.
We participate in staff secondments with fellow members of the International Organization of Securities Commissions (IOSCO).
The objectives of these secondments are to:
- drive international and cross-jurisdictional initiatives
- build expertise in critical areas
- develop organisational and individual relationships, and
- provide development opportunities for staff.
In the last two years, we have participated in secondments with regulators from the United Kingdom, China, Singapore, Saudi Arabia and Malaysia. Depending on their focus, secondments may vary from between one month to 12 months in length and may be hosted by one or a number of teams within the host regulator. Our markets teams are especially popular with overseas regulators wishing to learn more about our real-time surveillance capabilities.
Past secondments have given us valuable insights into the inner workings of fellow markets regulators. For example, ASIC staff members seconded for three months to the China Securities Regulatory Commission (CSRC) returned with a comprehensive understanding of the CSRC's approach to market regulation and enforcement, which they then shared throughout ASIC.
A lesser-known aspect of our international engagement is the technical assistance that we provide to regulators in the Asia-Pacific region.
The global financial crisis highlighted the importance of developing and implementing consistent global standards and developing cooperative agreements for the supervision of global businesses. This knowledge underpins our technical assistance program.
We provide technical assistance for specific (one-off) projects or on an ongoing basis. This may take the form of workshops, seminars, internships and advice, among other activities.
Since 2006, we have advised the Indonesian Financial Services Authority (OJK) on a range of technical topics. This program is funded by the Australian Department of Foreign Affairs and Trade.
In 2014, we assisted the OJK to conduct an assessment of its securities regulatory framework against IOSCO's Objectives and Principles of Securities Regulation. The two countries continue to work together to address regulatory gaps identified during this process.This year, joint activities are focusing on:
- risk-based conduct supervision (particularly in capital markets)
- assisting to establish organisational arrangements to support risk-based conduct supervision, and
- the development of training plans.
We actively participate in international policy and standards setting for financial markets, primarily through our membership of IOSCO. ASIC's Chairman, Mr Greg Medcraft, is the Chair of the IOSCO Board. We are also members or chairs of the Assessment Committee, Committee on Issuer Accounting, Audit and Disclosure, Committee on Regulation of Market Intermediaries, Committee on Regulation of Secondary Markets, Committee on Enforcement and the Exchange of Information, Committee on Investment Management, Committee on Commodity Derivatives Markets, Committee on Credit Ratings Agencies and the Committee on Retail Investors and the Task Forces on Cross-border Regulation, Financial Benchmarks and OTC Derivatives Regulation.
These committees design the policies that will eventually apply to Australian businesses, the overseas bodies they deal with and the foreign regulation that will apply to them. We need to ensure we understand the new international regulation being proposed and how it will affect Australia, Australian markets and Australian businesses. Often, we need to be in a position to affect the direction of that policy.
We are also a member of the Asia-Pacific Regional Committee which addresses regional concerns.
Cooperation with other regulators
We cooperate with other international regulators to share information in order to assist each other with the supervision of markets and enforcement of regulation. This is done in accordance with the memoranda of understanding we have with other regulators and IOSCO's Multilateral Memorandum of Understanding.
We also cooperate with other regulators to discuss and respond to new policy developments and concerns, either directly or through a range of international groupings.
Maintaining our international regulatory capabilities
We have benefitted enormously from international engagement with overseas regulators. By extension, participants in our financial markets have also benefitted from the efficiencies, standardisation and understandings that have resulted from this collaboration.
The packed agenda of international regulatory reform is unlikely to slow and may even intensify. We need to ensure our international regulatory expertise and understanding of global markets continues to support our ability to ensure fair, orderly and transparent markets.
We have been examining how best to meet our future needs regarding global markets and international regulation. International engagement will continue to be a key component of this. Already, we are working with overseas regulators to increase the scale and diversity of our secondment program. At the same time, we are exploring new avenues for informal interaction and relationship building.
ASIC staff member delivering workshop to OJK staff (2015).