Industry bodies release G20 regulatory reform paper

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LONDON – A group of UK and international financial services industry associations has released a paper on suggested objectives for regulatory reform, prior to the meeting of the G20. Finance ministers and central bank governors from the top 19 global economies, plus the European Union, will meet in Washington DC on November 15.

The trade bodies rely on pillars of reform in financial stability, liquidity management and market confidence, and efficient allocation of resources. They say normal market operation – with an end to reliance on state support – should be established as soon as possible.

The paper has been jointly released by the London Investment Banking Association, the International Capital Markets Association, the International Swaps and Derivatives Association, the Securities Industry and Financial Market Association, the British Bankers’ Association and the Futures and Options Association.

Cross-border consistency to enhance existing regulatory tools and objectives and outcomes across borders is also flagged as key to improving the framework of international financial stability.

The paper also underlines the importance of maintaining fair dealing and access to capital and funding, while stressing the need for effectively resourced supervision in the complex financial markets where the crisis has its roots.

Guiding principles for objectives are stressed by the paper. Modernisation both of existing national and cross-border regulatory tools features most prominently. The authors highlight the need to distinguish between day-to-day supervisory co-operation and financial stability co-ordination.

More development of supervisory colleges and financial stability groups, together with existing tools are highlighted as crucial. The paper also underlines the importance of co-ordination with the economies of developing nations.

The paper also emphasises the importance of continuing down the risk-based approach to regulation, as well as continuing to resist protectionist impulses and striving to adopt fair and compatible approaches to regulation in areas where international consensus is illusive.