IOSCO is looking to see how investment products that pose a risk to the broader financial system can be supervised more directly. Failure by Regulators and Central Banks to spot system-wide risks from products, markets and banks should not recur.
Global securities regulators have agreed to focus more on the risks which products and markets pose to the broader financial system as they reassess their role in the light of the credit crunch.
"We are setting out a standard telling regulators that you should be looking and trying to assess emerging risks in market conduct," Jane Diplock, chair of the International Organisation of Securities Commissions' (IOSCO) executive committee, told Reuters.
Failure by all regulators and central banks to spot system-wide risks from products, markets and banks is widely accepted as a core lesson from the worst financial crisis in 70 years.
In the hope of averting taxpayer bailouts, the European Union and United States are setting up structures to monitor systemic risk better so they can spot asset bubbles earlier. Products such as sub-prime mortgages, which lay at the heart of the crisis, were either too lightly regulated or not at all.
Regulators are wrestling with the issue of whether direct product regulation is needed to ensure they are suitable for consumers.
More regulators are requiring sellers to provide a short, clear statement to consumers on the risks of products; they are also looking at whether actual product vetting is needed.
Press release
© IOSCO
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article