The International Capital Market Association (ICMA), the self regulatory body which represents financial institutions active in the capital markets, has fully endorsed the ‘Principles for Better Regulation’ issued by the International Council of Securities Associations (ICSA) of which it is an active member.
It is now widely recognised that inappropriate or excessive regulation undermines financial markets to the detriment of consumers, businesses and economic growth generally and consequently a number of ‘better regulation’ initiatives have been adopted by governments, regulators and market participants in different countries. ICSA has drawn together elements from these to produce its ten ‘Principles for better regulation’ to act as a basis for further discussion with regulators and the market.
Commenting on the principles, René Karsenti, ICMA’s Executive President said; “ICMA considers the issuing of these principles to be a major step forward in acknowledging the importance of principles based regulation in delivering an adaptable and flexible regulatory regime which will support our members’ activities in rapidly evolving financial markets”.
The principles clearly set out the criteria for deploying regulatory action by first establishing that there has been a significant market failure which is not ‘appropriately addressed by existing regulations and their enforcement and which is unlikely to be mitigated over a reasonable period of time by market forces’.
“ICMA wholly supports the view that regulators should look to other responses to a market problem before resorting to legislative measures”; observed Nick Collier ICMA’s Head of Regulatory Policy at ICMA. “As the only pan-European self- regulatory organisation for the capital markets, ICMA’s experience over a period of more than 30 years has shown that self regulation is often a proven and successful alternative to statutory regulatory intervention to correct market failure”.
The full text of ICSA’s ‘Principles for Better Regulation’ can be found on the ICSA website at www.icsa.bz and on the ICMA website www.icma-group.org.
ICSA has also published two other sets of guidelines, endorsed by ICMA. ‘Principles for Governance of Market Infrastructure’, which promotes a framework for governance at market infrastructure providers that would provide accountability and transparency for owners, users and regulators, and ‘Best Practices for SROs’ which sets out to help Self Regulatory Organisations (SROs) manage conflicts of interest and maintain public confidence in their activities.
