| LONDON, June 27
LONDON, June 27 The world's top securities
watchdog will intervene earlier with new rules to help avert
supervisory clashes like the transatlantic spat over derivatives
markets, its head told a conference on Wednesday.
The International Organisation of Securities Commissions
(IOSCO) comprises supervisors from all the world's top markets,
such as the U.S. Securities and Exchange Commission, Japan's
Financial Services Agency and France's AMF.
It drafts principles for securities rulemaking such as
clearing, high-frequency trading and short-selling which member
countries then apply locally.
"One thing we have to do as an organisation is to move
upstream, to identify securities risks globally as early as
possible," IOSCO Secretary General David Wright told the IDX
derivatives conference in London.
"IOSCO needs to be in that early, ex-ante role, shaping how
rules should apply. That is the space we need to be in and not
when the Europeans and Americans have already draw up their
rules. That is too late," Wright said.
The market for off-exchange instruments like credit default
swaps and interest rate swaps is largely traded in London and
New York. The industry fears U.S. rules to make the market more
transparent will force European firms, already facing new local
rules, to comply too and bump up costs.
There was a need for intense cooperation among regulators,
particularly across the Atlantic, Wright said.
"At the moment we do have, it seems to me, some difficulties
here. My appeal would be to really sort this out. I won't be
easy as it's a classic conflict of law situation here," he said.
A toolbox for regulatory cooperation was needed to help
converge national rules, though full harmonisation will remain
impossible for the foreseeable future, he said.
He singled out Britain, where IOSCO member the Financial
Services Authority said last week a fifth of company
announcements were preceded by unusual share price moves.
"That is 20 percent too much," Wright said.
Just three months in the job, the former top European
Commission official wants to make the Madrid-based body more
It has been criticised for drafting bland rules late in the
day that all members can agree on but with no regulatory bite.
The rise of the Financial Stability Board, the regulatory
arm of the world's top 20 economies (G20), has put pressure on
IOSCO and other global standard setters to raise their game and
put more emphasis on consistent follow through on timely rules.
"If we can't apply what we agree, then we should be
described as a talking shop and that is simply unacceptable,"
He warned the derivatives industry he would be coming cap in
hand for money to fund an IOSCO research foundation.
The revamped IOSCO will still have no power to impose new
rules or sanction breaches, but Wright would use "every
technique in the book" to put pressure on members to comply.