MALAYSIA TO BE STANDARD-SETTER
First establishment outside Spain will serve as template for others, says its chairman
MALAYSIA will set the standards for other upcoming International Organisation of Securities Commissions’ (IOSCO) regional hubs, following the establishment of the Asia Pacific (APAC) hub at the Securities Commission building here.
“It is important that we have a hub in the major regions that IOSCO covers, because one will be able to become more relevant in these regions, understand it better and configure it with the rest of network while ensuring the needs of the region is addressed,” said IOSCO chairman Ashley Adler in a briefing with selected media yesterday.
Alder said Malaysia was an ideal location for the hub because of multiple reasons, including its highlydeveloped capital markets, status as an emerging market (EM), committed regulators with an international view and strategic geographical location within Asia.
“If you have regulations that are implemented usually in an EM, it is extremely hard to connect those regulations to those from the developed markets because there is a disparity of standards,” he said.
“However, if you are able to narrow the gap, you will enter a world where capital will flow more freely across borders, and that is important, as the vast amount of Asian savings is being used to invest in assets in the West instead of Asia, even though there is a need for Asian savings to be deployed in Asia for regional growth.
“Asian savings can then be deployed more productively once you start cooperating around the region. This will ensure smoother flows and addresses the infrastructure gap, which is the most important issue as far as we are concerned.”
The IOSCO APAC hub here, he said, would be able to help iron out this issue, but only over the medium to long term, as infrastructure typically takes a long time to mature.
He said a hub within the region was even more significant because of broadly undeveloped capital markets.
“Malaysia has a highly-developed capital market, so add in a committed regulator with an international view and geographical position that is ideally placed for people to come into the hub in order to work with the hub with capacity building across Asia, would enable Asian capital markets to allocate its vast savings to Asian infrastructure and avenues, which will then become more compelling,” he said.
“It could be based in one of a number of places across Asia, but it is apparent that there is enthusiasm and commitment in Malaysia, which is great.”
He said infrastructure spending was extremely long-term, and this was one of the reasons why investors found it so difficult to fund, as there was too much uncertainty.
“However, most institutional investors, particularly pension funds, have to think long-term, as they have long-term reliabilities. This is where the IOSCO APAC hub can help.”
Going forward, Alder said it was only logical to set up more hubs in different parts of the world, like the Middle East and Africa, as well as the Americas.
“But Malaysia will definitely set the standards for these other hubs to come as it is our first hub outside of our headquarters in Spain.”
Established in 1983, IOSCO develops and promotes the implementation of global standards for capital market regulations.
Its members from 115 jurisdictions collectively regulate more than 95 per cent of markets worldwide, which totals some US$140 trillion (RM622.9 trillion).