By Gbenga Agbana

Tuesday, 19 Oct 2010

The Emerging Market Committee of the International Organisation of Securities Commissions has approved two reports containing recommendations for regulators in emerging markets.

The recommendations, according to a statement signed by the Head of Media, IOSCO, Mr. David Cliffe, are designed to assist emerging markets resolving issues relating to market interventions and securitisation.

The reports, according to the Chairman of the Emergency Markets Committee, Mr. Vedat Akgiray, also present a comprehensive picture of the impact the recent financial crisis had on securitised debt markets, the operations of exchanges and how the regulators reacted to the crisis.

Akgiray, while presenting the report, said, ”We are pleased to be able to publish today, our reports and recommendation on market interventions and securitisation in emerging markets. These two reports present a comprehensive and informative picture of the impact that the financial crisis had on securitised debt markets and the operation of exchanges and the manner in which regulators reacted to these events.

”Both reports draw lessons from regulators‘ actions and set out recommendations for best practice in these areas, which will assist market authorities in mitigating vulnerabilities in their jurisdictions and supporting the long-term development of their capital markets.”

A breakdown of the recommendations indicated that the intervention in emerging markets entailed a regular review of the framework governing interventions in the light of the changing trading landscape; the need to consider market interventions in a holistic manner and not on a piecemeal basis; prevention of regulatory arbitrage though the consistent application of market interventions and a proper framework for the coordination and communication between stock exchanges and regulators.

The rule on securitisation and securitised debt in emerging markets, according to the report, includes recommendations on both the enabling conditions necessary for the development of the markets and those required for the further development of the emerging markets.

The committee recommended that regulators in emerging markets should collect a minimum set of information on securitisation markets to monitor their development and identify potential sources of risk for financial stability or consumer protection.

The regulators should also strengthen disclosure requirements for securitised financial products, both in the context of public and private offerings, it said.

Source: Punch