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NZ money - Source: ONE News
New Zealand financial institutions do not need any more regulation to head off the global market crisis, but other countries are not doing enough, New Zealand's securities watchdog suggests.
"New Zealand's banking system is strong and fundamentally sound," Securities Commission chairwoman Jane Diplock said at the International Organisation of Securities Commissions (IOSCO) conference in Tel Aviv.
"It has been largely unexposed to the toxic products that have brought other banks in the world into trouble and does not require any regulatory reforms connected to the global meltdown."
The four-day annual conference, which ended on Thursday (local time), discussed the global crisis and looked at ways for regulators to restore financial stability, improving corporate governance and risk management.
Insufficient oversight over complicated financial instruments has been viewed as a key factor in the meltdown.
"Interventions have been put into place, but nothing to the extent needed in the United States or Europe," Diplock said.
She said New Zealand reforms had been spurred by local finance companies collapsing before the global crisis broke and were related to the lack of regulation.
"Measures to regulate financial mediatories as well as trustees in this area are now under way and will strengthen our country's regulatory framework."
Diplock, who has chaired IOSCO's executive committee since 2004, said IOSCO would soon announce a set of guiding principles to enable financial jurisdictions and national governments to implement necessary regulatory reforms.
The principles related to issues like hedge funds, short selling, asset-backed securities and disclosures - which had been either unregulated or under regulated.
"There is a lot of appetite in most countries around the world to implement them because they don't want the (unregulated) situation to continue," she said.
"We have come to the view that markets will not discipline themselves and we can't leave it to them to do so. Innovation of itself is not necessarily beneficial. But we don't want to dampen it because we have had years of prosperity as a result of that innovation.
"A balance is to be struck and as regulators we are alive to this."
IOSCO has 65 member countries including developed and emerging markets and is responsible for regulating more than 95% of the world's securities markets.
"We are undertaking also a strategic review of our organisation to adapt it to the global needs of the 21st century," Diplock said.
