One of the twentieth century’s most thorough and discerning historians, R. M. MacIver once said “new illumination on the social implications of a particular economic system, has led the market economy to grow into a full stature in the nineteenth century. ” To achieve regulatory objectives one has to make sure that there is a level plying FIELD for all participants in the capital market.
Regulators should pursue full functional regulation of the capital markets, which will provide for a “seamless” regulatory frame work, thereby reducing the scope for regulatory arbitrage. The regulatory framework will have to be strengthened through enhanced enforcement and supervision capacity including thorough training. Regulators have to coordinate and cooperate especially with respect to surveillance of financial conglomerates and the entire financial system to ensure the threats to systematic stability are to be dealt with early and effectively.
Regulators will have to consider how to effectively supervise players who are active in several markets and having the potential to exploit regulatory gaps across different jurisdiction [distinction between institutional arrangement sand financial activities have blurred in recent years and the scope and nature of financial activity has developed well beyond that of traditional regulatory structures and jurisdiction.
For regulators it is important that they should be sufficiently trained and exposed to the breadth of policy, legal and technical issues concerning the development and regulation of capital markets. Self regulatory organizations should adopt specified baseline governance standards, including a majority independent board and fully independent nominatives, governance, audit, comparison and regulatory oversight. SRO’s should take steps to separate their regulatory functions from its business operations.
SRO’s should publicly disclose the update at least annually specified into, about their operations and structures, including their governance processes, regulatory programs, financial condition and ownership. The SRO’s must submit quarterly and annual reports to the SEC containing specified into, on the operation of their regulatory projects including their examinations, investigation and enforcement activities. This information is intended to support the SEC’s SRO inspection projects.
Over past few years, market issues have used business risk factors and these along with expanding regulatory requirements are compelling financial institutions and their technologies to look at the conveyance of key process and the sharing of data that serve risk mitigation, regulatory compliance and security management. The first thing is that all the regulators must need to remember is that while regulation should bring benefit, it is also a source of cost to the financial sector.
In assessing the regulatory intervention, the starting point is to determine whether the market is able to deliver acceptable outcomes or alternatively whether there is a significant market failure. Identifying whether or not there is a market failure there is a first step:-Not a sufficient condition in weighing up the case for regulation, most market operate in real world conditions, including those for which we have oversight, will exhibit some form of market failure; the correct test must go beyond this.