By Karey Wutkowski
WASHINGTON (Reuters) - Securities regulators around the world are reassessing their approaches to overseeing complex financial products in light of the subprime mortgage crisis that has spread to international markets, a global regulator said on Thursday.
Greg Tanzer, general secretary of the International Organization of Securities Commissions, said regulators are balancing the priorities of limiting risk injected to the markets and encouraging innovations that might include risky products.
Complex structured products tied to subprime mortgages in the United States are at the heart of the recent financial turmoil that has caused significant losses in markets around the world.
Regulators and credit rating agencies have been criticized for being too slow to recognize the credit deterioration in complex mortgage- and asset-backed securities.
"I think ... IOSCO members are clearly concerned about the current situation and are clearly rethinking their own approaches," he said via telephone from Amsterdam to the Reuters Regulation Summit in Washington.
IOSCO is made up of watchdogs from more than 100 countries and includes the U.S. Securities and Exchange Commission, United Kingdom's Financial Services Authority, and Japan's Financial Services Agency among its members.
The organization released on Wednesday some guidelines on the responsibilities of financial players when dealing with complex products.
It said financial institutions should make thorough disclosure of the amount of their exposure to structured finance in the market. It also said it was up to institutional investors and asset managers to undertake strict due diligence before they invest in complex structured products. Continued...
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