Capital markets across the globe: Integration or fragmentation?
A speech by Greg Medcraft, Chairman, Australian Securities and Investments Commission at the Salzburg Global Forum on Finance in a Changing World (Salzburg, Austria) 27 June 2016
Thanks for the opportunity to share with you some of my thinking on this topic.
As a small open economy, fragmentation – or significant differences in regulatory approaches between jurisdictions – is a real issue for us. It means that regulated firms and issuers have to consider differences in regulation when engaging in cross border activity.
This creates hurdles for Australian regulated entities wanting to do their business offshore. This is because they need to register in each jurisdiction in which they want to operate and also be on top of different sets of regulatory requirements.
This also creates hurdles for issuers and investors wanting to access markets other than their own. These hurdles reduce the range of opportunities for Australian investors and the sources of finance for Australian businesses.
So, we have taken the issue of fragmentation really seriously, both domestically and in our participation and leadership of international organisations. We acknowledge there will be differences and there will be concerns to ensure, for instance, that investors can still take action when things go wrong in their home jurisdiction – but we need to ensure these differences are minimal.
We see the risks of fragmentation being addressed in three ways:
- working to ensure that national laws and regulations are as consistent as they can be
- collaborating on supervising those laws, and
- cooperating in enforcing those laws.
Let me briefly touch on each of these.