1. Singapore February 2001 Promoting Fair and Transparent Regulation in Securities Markets A Presentation to the APEC-OECD Co-operative Initiative on Regulatory Reform

2. Transparency relates to the openness and impartiality of decision making in the design, introduction, administration and enforcement of new or amended regulations. OECD Working Party of the Trade Committee, Strengthening Regulatory Transparency, April 12, 2000 What Is Transparency?

3. Why Transparency? A system of regulation that is transparent to market participants instills the confidence needed to attract suppliers and users of capital, improves market efficiency, and contributes to increased overall economic activity and investment. Transparent and fair regulatory systems are essential to the development of deep and liquid capital markets.

4. Promotion of Transparency Does …. Enhance Articulation of Regulatory Objectives Improve Regulation Through Practitioner Input Provide Better Business Predictability Foster More Efficient Markets Increase Public Trust and Confidence

5. Promotion of Transparency Does Not …. Prohibit Adoption or Enforcement of Regulatory Actions Based on: –Prudential Concerns –Legitimate Public Policy Objectives

6. Improving Regulatory Transparency Is a Global Effort APEC OECD EU IMF WTO IOSCO

7. IOSCO Objectives and Principles of Securities Regulation 6.5 Clear and Consistent Regulatory Processes –Processes Which Are: consistently applied comprehensible transparent to the public fair and equitable – In Formulation of Policy: process for consultation with those affected public disclosure of policy in important operational areas generally desirable.

8. Principles of Fair and Transparent Regulation Complement IOSCOs work Broadly applicable to all financial services firms in global capital markets Five guiding principles

9. 1.Rules, regulations and licensing requirements should be considered and imposed, and regulatory actions should be taken, only for the purpose of achieving legitimate public policy objectives that are expressly identified, including, for example, investor protection, maintaining fair, efficient, and transparent markets, and reducing systemic risk. Principles of Fair and Transparent Regulation - 1

10. 2. Fair And Non-Discriminatory Enforcement –Regulations and regulators should not discriminate among licensed market participants on the basis of the nationality or jurisdiction of establishment. –The relationship between a regulator and a licensed market participant should be governed by the standards set forth in relevant rules and regulations. –The introduction of new securities products and services by firms should be governed by the standards set forth in relevant rules and regulations. Principles of Fair and Transparent Regulation - 2

11. 3.Regulations should be clear and understandable. Principles of Fair and Transparent Regulation - 3

12. 4. All regulations should be publicly available at all times. Principles of Fair and Transparent Regulation - 4

13. 5.Regulators should issue and make available to the public final regulatory actions and the basis for those actions, in order to enhance public understanding thereof. Principles of Fair and Transparent Regulation - 5

14. Regulatory Transparency in Japan Ensuring transparency and fairness in financial administration based on clear rules, market discipline and the principle of self-responsibility. The FSA is committed to achieving transparent and fair financial administration in every respect under clear rules based on market discipline and the principle of self-responsibility. Statement by the Commissioner on the Establishment of the Financial Services Agency - July 3, 2000

15. Measures to Improve Administrative and Regulatory Procedures in Japan Administrative Procedures Act –Effective April 1994 Public Comment Procedures –Adopted March 1999 No Action Letter System –Adopted July 2000 Information Disclosure Act –Effective April 2001

16. Next Steps Private Sector Dialogue with IOSCO Review and Adoption by Key IOSCO Committees: –SRO Consultative Committee –Executive Committee –Technical Committee –Emerging Markets Committee Enhanced GATS Transparency Provisions Review and Adoption in Other International Fora

17. Summary Growing global recognition of the importance of regulatory transparency in the financial sector Implementation of international transparency standards materially improves regulatory efficiency and market performance, while allowing regulators flexibility to address prudential and legitimate public policy objectives Guiding principles of fair and transparent regulation have global application Important to continue business/regulator dialogue across broad range of fora Establishing meaningful regulatory transparency is a difficult, continuous process of trail, error and refinement - but well worth the effort