Featured Product

    BIS Report Examines Policy Options for Development of Capital Markets

    January 23, 2019

    BIS published a report that examines trends in capital market development and identifies the factors that foster the development of robust capital markets. The report finds that large differences persist in the size of capital markets across advanced and emerging economies. Emerging-economy markets have been catching up with their more advanced peers, but the gap has not yet been closed.

    The report first discusses the importance of a strong enabling environment characterized by macroeconomic stability, market autonomy, strong legal frameworks, and effective regulatory regimes. It then identifies the drivers of capital market development—particularly better disclosure standards, investor diversity, internationalization, deep hedging and funding markets, and efficient and robust market infrastructures. Finally, the report presents the following recommendations across six broad areas and outlines practical ways in which policy can enhance these drivers, while recognizing that some potential policy actions lie outside the powers of central banks:

    • Promote greater market autonomy by addressing financially repressive policies, such as restrictions on initial public offerings to prop up stock market valuations or misuse of regulatory instruments that enable some to borrow at below-market rates
    • Strengthen legal and judicial systems for investor protection by easing access to legal remedies
    • Enhance regulatory independence, resources, and enforcement powers
    • Increase the depth and diversity of the domestic institutional investor base
    • Actively engage with potential market entrants and prepare for spillover risks
    • Coordinate regulations to develop deep complementary hedging and funding markets 

    The report concludes that enhancing market ecosystems by developing deep complementary markets for derivative, repo, and securities lending requires a coordinated effort along multiple dimensions. These include a supportive legal and regulatory environment, regulatory coordination to broaden the investor base in these markets, and robust and efficient market infrastructures such as central counterparties and trade repositories to manage potential financial stability risks. The report also discusses the merits of raising disclosure and accounting standards. In a number of cases, there appears to be regulatory scope to strengthen investor protection by encouraging improvements in the quality of disclosure and accounting. The current rules in a number of emerging market economies could be strengthened by bringing them into line with international standards. Key elements include requiring better disclosure of “related-party” transactions and information about board members, beneficial ownership, and control and group structures. 

    This report was prepared by the Committee on the Global Financial System (CGFS) Working Group. The analysis and recommendations of the Group, as expressed in this report, are based on a review of the existing academic and policy literature. The report also draws on hard data, along with information from a survey on market participants. Survey results presented in this report cover responses from 10 Working Group member jurisdictions. Five were the emerging market economies of Brazil, China, Hong Kong SAR, India, and Mexico while five were the advanced economies, namely Australia, Italy, Japan, Spain, and the United Kingdom. The findings of the report were bolstered by a survey of market participants in these 10 economies, which showed that high regulatory costs can make capital markets less effective in channeling financing to the economy.

     

    Related Links

    Keywords: International, Banking, Insurance, Securities, PMI, Accounting, Capital Markets, Disclosures, Derivatives and Hedging, CGFS, BIS

    Related Articles
    News

    BoE Seeks Information Before Migrating Statistical Reporting to BEEDS

    The Bank of England (BoE) published the Statistical Notice 2021/09 requiring additional information from firms and software vendors to assist in the onboarding and testing phases for migrating statistical reporting to the BEEDS portal.

    October 25, 2021 WebPage Regulatory News
    News

    FCA Publishes Final Rules on Investment Firms Prudential Regime

    The Financial Conduct Authority (FCA) published the final rules on the Investment Firms Prudential Regime (IFPR) to streamline and simplify the prudential requirements for solo-regulated UK firms authorized under the Markets in Financial Instruments Directive (MiFID).

    October 25, 2021 WebPage Regulatory News
    News

    CFRF Publishes Guides to Manage Financial Risks from Climate Change

    The working groups of the Climate Financial Risk Forum (CFRF) published a second round of guides (or Session 2 guides), written by the industry for the industry, to help financial firms manage climate-related financial risks.

    October 21, 2021 WebPage Regulatory News
    News

    PRA Finalizes Policy for Non-Performing Exposure Securitizations

    The Prudential Regulation Authority (PRA) published the final Policy Statement PS24/21 that contains the new Non-Performing Exposures Securitization Part of the PRA Rulebook and an updated Supervisory Statement SS10/18 on the general requirements and capital framework with respect to securitizations.

    October 21, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EU to Explore Potential of Establishing a Joint Cyber Unit

    The European Council adopted conclusions inviting the European Union (EU) and the member states to further develop the cybersecurity crisis management framework.

    October 19, 2021 WebPage Regulatory News
    News

    EC Sets Out Work Program for 2022

    The European Commission (EC) adopted the work program for 2022.

    October 19, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7598