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Yang Amat Berhormat Dato’ Sri Mohd Najib Bin Tun Haji Abdul Razak, Prime Minister of Malaysia;
Ashley Alder, Chairman of the International Organization of Securities Commissions
Esteemed speakers
Distinguished guests
Members of the media
Ladies and gentlemen,
- A very good morning to you. On behalf of the Securities Commission Malaysia (SC), I would like to warmly welcome you to the GEM Regulatory Conference 2017 which is being held in conjunction with the launch of the IOSCO Asia Pacific Hub here in Kuala Lumpur.
- I would like to extend my deep gratitude to the Honourable Prime Minister, Dato’ Sri Mohd Najib Tun Abdul Razak, for making time to be here this morning and for kindly agreeing to deliver the keynote speech and officially launch the IOSCO Asia Pacific Hub at the SC.
- The Honourable Prime Minister has been a strong supporter of the SC's efforts in the development and regulation of the Malaysian capital market. Together with other global regulators, we were especially pleased to have the Honourable Prime Minister’s presence during the IOSCO Board dinner that was held in Kuala Lumpur a couple of years ago.
- I am also delighted to see strong support from senior global and regional regulators at this event today. There are over 30 countries represented from all parts of the world, and some of the senior regulators have kindly agreed to speak at the Conference and regulatory programme over the next three days. There are also various organisations and entities, both international and domestic that are participating in the exhibition below as part of this event[1]. Their presence together with leading market experts demonstrates the importance of this platform to share expertise and insights to further strengthen regulatory and industry capacity, and the development and resilience of capital markets overall.
- I would also like to extend my appreciation to Ashley Alder, the IOSCO Board Chair and HK SFC CEO, who has played an instrumental role in providing guidance and leadership towards the setting up of the IOSCO Asia Pacific Hub. Ashley is a strong proponent of issues affecting the Asia Pacific region, and has actively voiced the region’s collective regulatory concerns in international financial policy making. We are also highly appreciative of the confidence of the IOSCO Board in the SC as an organisation, including our contribution to IOSCO’s efforts in promoting adherence to global regulatory standards.
- We have also received tremendous support from the IOSCO General Secretariat, located in Madrid. The newly appointed IOSCO Secretary General, Paul Andrews (who is also here today) has been very committed in ensuring the practical and effective implementation of the Hub.
- On a personal level, as Chair of IOSCO’s Growth and Emerging Markets Committee, the largest committee in IOSCO, I am delighted that the SC has been given this opportunity to work with IOSCO to further the interests and needs of growth and emerging markets. The SC is well-positioned to support IOSCO in its efforts to strengthen the regulatory capabilities of its members given our long track record in market development, capacity building, and technical assistance.
Ladies and gentlemen,
- Established in 1983, IOSCO members from over 115 jurisdictions, oversee capital markets worth about USD140 trillion, and collectively regulate more than 95% of markets worldwide. IOSCO is undoubtedly a highly significant organisation, and represents to capital markets and capital market regulators what the Basel Committee on Banking Supervisors (BCBS) is to banking regulators and banks.
- As part of its strategic vision IOSCO has recognised the significance of having regional presence and the need to expand its reach to respond to the growing demands and interests of its wide membership. Given an increasingly complex market environment, growing financial innovation and rapidly expanding cross-border activity, the Asia Pacific Hub will enable IOSCO to leverage on regional expertise and infrastructure and scale up its efforts to provide more targeted solutions to serve the needs of the region.
- In this regard, the SC is delighted to host the very first regional hub of IOSCO. The selection of Malaysia as the first location outside the IOSCO headquarters in Madrid, demonstrates the conduciveness of the overall environment and ecosystem of the country in supporting the establishment of international organisations and entities. It also reinforces Malaysia's efforts in building a high quality and well-regulated capital market, and a reflection of the SC’s commitment in facilitating greater cross-border collaboration. The SC since very early on has played an active role in global regulation and has recognized the importance of participating in organizations like IOSCO which play an active role in shaping the global regulatory and market architecture.
Ladies and gentlemen,
- The Asia Pacific Hub is expected to play a key role in helping build the region's capital markets (both individually and collectively), address regulatory gaps and strengthen the overall implementation of global standards in the region. It will also contribute to strengthening the voice and priorities of the region in the international financial agenda. In addition, the Hub will also foster greater connectivity and inclusiveness and encourage greater cross border coordination and collaboration.
- Through its initiatives, the Asia Pacific Hub will facilitate greater cross border regulatory cooperation and promote the transfer of knowledge, expertise and best practices from across IOSCO’s wide membership, which will contribute to overall efforts to strengthen the resiliency of the region’s capital markets.
Ladies and gentlemen,
- Global paradigms have changed, and we are now regulating in what has been described as the new abnormal. The sharp pace of technological innovation, the surge of economic nationalism and the proliferation of competitive deregulation is challenging the fabric of modern capital markets and impacting global regulatory and market equilibrium. As the world’s capital markets today make up more than half of global financial assets, and the shift towards market based financing becomes all the more pronounced, policy paradigms must also reflect the new reality.
- While a global approach to consistent regulation was a focus post the global financial crisis, recent geopolitical changes have brought uncertainty into our global regulatory system and unpredictability in the macro-policy environment. Although the extent of financial deregulation remains uncertain, this potential shift raises concerns of regulatory arbitrage which can thrive in an uncertain market environment. Intense competition for deal flows and resurgence of economic nationalism may also hasten the fragmentation of regulation and lead to widespread competitive deregulation.
- Amidst a connected, complex and global marketplace, the increase in digital innovation can also pose challenges. Regulators will need to reassess their supervisory approach and expertise given that existing supervisory practices are largely predicated on human interface. Digital markets can also heighten potential transmission channels for vulnerabilities. Cyber risk is now a transnational concern, which therefore makes the sharing of information and cross border cooperation absolutely imperative in increasing cyber resilience of our markets.
- While we are navigating this new abnormal, we must also not lose sight of the need to reinforce good conduct and behaviour as misconduct risks continue to threaten the integrity of global markets. Corporate culture, board effectiveness, sales practices and the alignment of incentive structures are critical in ensuring fair outcomes to investors.
Ladies and gentlemen,
- In this new environment, we will undoubtedly need to remain agile and innovative. This will require continuous reassessment of our approaches and capabilities in safeguarding investor trust and confidence while addressing vulnerabilities in our markets.
- The ongoing dialogue among regulators must also continue to generate well-considered international efforts to reduce contagion risks. The global regulatory community must ensure that regulatory policies adopted promote fair, efficient and transparent markets and support capital formation while minimising the unintended consequences of regulation. In this regard, IOSCO is well placed to promote a collaborative approach with industry which will drive the growth of sustainable capital markets.
- Given the issues that will be discussed and the participation of high quality speakers at the Conference, I trust that we will gain greater insights to meet the ongoing and emerging challenges.
- Let me once again thank the Honourable Prime Minister Dato’ Sri Mohd Najib Bin Tun Haji Abdul Razak for his presence here this morning.
- I wish everyone a very productive Conference. Thank you for your kind attention.
