.jpg)
The Securities Industry and Financial Markets Association (SIFMA) today commended the UK Financial Services Authority (FSA) for its recent paper on Principles-Based Regulation: Focusing On Outcomes That Matter, and called for financial services regulators world-wide to promote a pragmatic, principles-based approach to regulatory requirements.
“Technology, innovation and globalization have transformed capital markets. Focusing on outcomes rather than processes is the best possible way of ensuring that regulation works with the grain of dynamic and innovative capital markets,” said Karsten Moller, senior managing director and head of SIFMA for Europe and Asia.
“Our global marketplace needs healthier, principles-based regulation that eliminates redundancy and duplication and makes it easier to harmonize our divergent regulatory landscapes globally,” said Marc Lackritz, SIFMA president and CEO.
SIFMA believes that the main benefits of a more principles-based regulatory environment are to:- Reduce significantly the burden on regulatory and industry resources, and therefore the cost of doing business for investors;
- Clarify regulators’ expectations, thereby making regulation more predictable for businesses;
- Enhance an atmosphere of trust and partnership between regulators and market participants;
- Adapt quickly to changing market needs and circumstances, thereby providing flexibility that will encourage innovation and competition;
- Place the responsibility clearly and firmly on those who run businesses to achieve the highest standards, whilst empowering businesses to develop the processes best suited to get there;
- Strengthen market participants’ confidence, by making it more difficult to by-pass a principle than a rule – prescription does not prevent misconduct;
- Improve the purpose and quality of regulation, by making regulators focus on outcomes that matter, thereby also enhancing their effectiveness in supervisory and enforcement functions at both national and cross-border levels;
- Facilitate global convergence and mutual recognition of financial services regulation.
Consequently, SIFMA urges the international regulatory community to actively reflect on how principles-based regulation can be better deployed, employed and implemented. SIFMA applauds the efforts of the SEC, the European Commission and CESR towards a mutually acceptable global accounting standard and is encouraged by the work of IOSCO which can serve as a catalyst for the development of international principles-based regulatory standards.
