Call for responsive regulation My third point concerns the role of regulators and regulations. Markets are calling and indeed demanding for regulation to be more responsive to the needs of innovation and growth. If globalisation has changed the international outlook of markets, the blurring of sectoral boundaries has transformed financial markets from within. With the mergers and acquisitions of the 1990s in the financial industry, cross-selling has become prominent today with banks seeking to distribute investment and insurance products while stockbrokers offer cash management and checking accounts. Insurance corporations on their part  BIS Review 31/2002  3  have concentrated efforts to promote investment-linked policies. The trend is in part demand-driven with customers seeking a one-stop financial house that provides convenient and integrated approach to money management. Notwithstanding the global economic downturn which has checked M&A activities, market players have not let up efforts to gain a competitive edge by consolidating their positions through alliances. The regulatory response to this has been a trend towards more integrated supervision. This allows regulators to supervise the range of activities more efficiently by taking a holistic view of the financial services market. The UK FSA is one example of integrated supervision under one roof while Australia’s Securities and Investments Commission and the Australian Prudential Regulation Authority have ambits that cut across different industries. As product lines converge, regulators in setting the rules have to be careful not to inadvertently pick and choose the winning models.

The end product is usually of laudable standards and serves as a good yardstick for domestic practices to be benchmarked against. Investor protection The third reason is that a common set of standards facilitates sound regulatory oversight that is based on consistent treatment of cross-border markets and activities. With regulators using the same standards in assessing systems, products and practices, market players that deal with foreign institutions or instruments can take comfort that those institutions and products are regulated based on similar high standards. Efficiency & cost savings And the fourth reason is that the establishment of a set of standards that is subscribed to internationally has the effect of aligning the regulatory practices in different jurisdictions. This allows international financial institutions operating in different markets with similar features and rules drawn up according to international standards, to benefit from lower compliance costs. Given a choice, from the business proposition point of view, few fund managers, issuers or financial advisers would wish to expend resources on compliance systems to keep track of different requirements and procedures in different markets. Much work is already underway to develop international standards on specific subjects. Within IOSCO, MAS is a participant of various of its working groups including the Internet Project Team and the Implementation Committee which, as its name suggests, has been tasked to implement the 30 IOSCO principles of securities regulation. Apart from IOSCO, a number of other fora has also proposed recommendations in their respective areas.