Impact On and Responses of Emerging Markets to the Financial Crisis

Impact On and Responses of Emerging Markets to the Financial Crisis Final Report EMERGING MARKETS COMMITTEE OF THE INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS September 2009 1 TABLE OF CONTENTS EXECUTIVE SUMMARY 4 CHAPTER 1: BACKGROUND, MOTIVATION AND APPROACH 6 Background and Motivation 6 Approach of the survey 7 Permanent Questions 8 Topical questions Summary of Respondents 8 9 CHAPTER 2: CONCLUSIONS AND RECOMMENDATIONS 10 Conclusions General Conclusions Areas for Further Inquiry Context of the Ongoing G-20 Process Recommendations CHAPTER 3: SUMMARY OF SURVEY RESULTS Introduction 10 10 13 15 15 18 18 Approach to setting out responses 18 Key Regulatory and Supervisory issues before the onset of widespread global financial turbulence 25 Key Regulatory and Supervisory issues after global turbulence became more pronounced 30 Sources of instability 34 Measures undertaken to address instability 35 Additional Information and Comments Received 37 CHAPTER 4: ANALYSIS OF SURVEY RESULTS 38 Sustained focus on systemic risk issues 39 Increasing emphasis on regulatory approach and capacity 41 Increased focus on business conduct of market participants 43 Continued market development efforts 43 Macroeconomic risks to markets 44 Regulators have acted more proactively in combating the crisis 48 APPENDIX 51 Appendix 1: Detailed Survey Results 51 Appendix 2: EMC Chairman‘s Task Force on Financial Crisis 73 Appendix 3: The Core Task Force Team 77 Appendix 4: GDP and market capitalization data for the Sample jurisdictions 78 Appendix 5: The Survey Questionnaire 81 Appendix 6: Mandate 84 Appendix 7: Feedback statement on the public comments received on the Consultation Report 87 LIST OF TABLES AND FIGURES Table 1 Sample jurisdictions .............................................................................................. 9 Table 2 Summary of categories and subcategories for questions 1 to 4 .......................... 19 Table 3 Regulatory and supervisory issues faced by emerging market regulators in the 12 months prior to December 2008 ........................................................................................... 26 Table 4 Sample of responses relating to Systemic Impact .............................................. 27 Table 5 Sample of responses relating to Market impact .................................................. 28 Table 6 Sample of responses relating to Governance and Compliance Issues ................ 29 Table 7 Changes in perception of regulatory and supervisory issues faced by emerging market regulators in the 12 months after global turbulence became more pronounced (no. of responses) ............................................................................................................................. 30 Table 8 Sample of responses relating to Regulatory Approach and Capacity Issues ...... 31 Table 9 Sample of responses relating to Systemic Impact issues .................................... 32 Table 10 Sample of responses relating to Conduct of Business issues............................. 33 Table 11 Major Issues of Concern in Last 12 Months in EMC Jurisdictions ................... 51 Table 12 Major issues of concern in next 12 Months in EMC jurisdictions .................... 52 Table 13 Summary of comments included in question 7 .................................................. 71 Figure 1 Hierarchy of Systemic Stability related groupings ............................................. 23 Figure 2 Hierarchy of Market Integrity related groupings................................................ 24 Figure 3 Hierarchy of Market Development Categories .................................................. 24 Figure 4 Proportion of respondents indicating "systemic impact" issues as high importance (by Region) ........................................................................................................ 26 Figure 5 Proportion of respondents indicating "market impact" issues as high importance (by Region) ........................................................................................................................... 28 Figure 6 Proportion of respondents indicating "governance and compliance" issues as high importance (by Region) ................................................................................................ 29 Figure 7 Proportion of respondents indicating "Regulatory Approach and Capacity" issues as high importance (by region) .................................................................................. 31 Figure 8 Proportion of Respondents indicating "Systemic Impact" issues as high importance (by region) ......................................................................................................... 32 Figure 9 Proportion of respondents indicating "Conduct of Business" issues as high importance (by region) ......................