SEC Chairman Schapiro, at the IOSCO Technical Committee Conference in Basel, remarked that the SEC’s philosophical emphasis on transparency is shared by securities regulators around the world, as well as by IOSCO as an organization.
Talking at the IOSCO Technical Committee Conference in Basel, SEC Chairwoman Schapiro focused on the following areas:
Transparency. In her view, the financial crisis has, more than anything, only reinforced the importance of information disclosure and the necessity of transparency for the existence of vibrant, well-functioning capital markets and sound regulation.Of course, the SEC’s philosophical emphasis on transparency is shared by securities regulators around the world, as well as by IOSCO as an organization.
Regulatory Priorities. The SEC has taken significant steps to address issues relating to the financial crisis. In addition to its efforts to transform its own enforcement programme and crack down on market abuse, the SEC has embarked on an aggressive rule reform agenda. Many of these reforms are aimed at enhancing disclosure in order to increase transparency. She said she could not discuss all of the SEC’s initiatives, but that she wanted to focus on three areas of particular interest.
Accounting. Accounting standard setters, including the International Accounting Standards Board and the US Financial Accounting Standards Board, are both in the process of addressing important issues raised by the crisis. At the same time, these standard setters are continuing to cooperate on the convergence of accounting standards. She applauds the quick reaction and ambitious timeline that accounting standard setters have laid out to revise the standards in question.
Credit Rating Agencies. Many of these did not perform as expected during the financial crisis. Despite this, many investors will continue to use ratings, given the sheer complexity and variety of investment instruments available to them.
With this in mind, the SEC has recently taken several important measures designed to improve the quality of ratings by fostering accountability, transparency and competition in the credit-rating industry.
Dark Pools. Markets are growing ever more sophisticated, with greater differentiation among the products and services offered. While this is a natural part of a dynamic market, regulators must be alert to whether, when niche products or services begin to take on larger market share, their effects on the broader market should raise concerns.
Dark pools are intended to help market participants preserve anonymity and engage in transactions without moving the market. There are legitimate reasons for market participants to seek these trading goals. Over time, however, the volume of trades executed through dark pools has increased, raising, in turn, the potential for dark pools to detract from the quality of public price discovery mechanisms.
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