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Risks should not be eliminated but carefully managed, he said and called for sufficient risk management techniques.
These include disclosure practices, limit excessive leverage and discourage exessive risk taking. However, the enforcement of rules is the key, he underlined.
Reflecting on the IOSCO response of the crisis he outlined the different areas, including the current work on hedge funds and CRAs. Talking about systemic risk issues, Tanzer underlined the need to consider the ‘perimeter’ of regulation and the need to consider systemic risks emerging through markets. Therefore, the role of CCPs, hedge funds and OTC derivative markets is now under scrutiny of IOSCO.
We need to have the capacity and perhaps also the courage to act the next time, he said and reiterated that global standards had to be implemented in all jurisdictions.