6th%20Asian%20Roundtable%20on%20Corporate%20Governance%20Theme%20II,%20Session%202%20Ensuring%20Capacity,%20Integrity%20and%20Accountability%20of%20Regulators%20and%20Supervisors%20Jaweria%20Ather%20Securities%20and%20Exchange%20Commission%20of%20Pakistan%20Seoul,%202-3%20November%202004 - PowerPoint PPT Presentation

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6th Asian Roundtable on Corporate Governance Theme II, Session 2 Ensuring Capacity, Integrity and Accountability of Regulators and Supervisors Jaweria Ather – PowerPoint PPT presentation

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Title: 6th%20Asian%20Roundtable%20on%20Corporate%20Governance%20Theme%20II,%20Session%202%20Ensuring%20Capacity,%20Integrity%20and%20Accountability%20of%20Regulators%20and%20Supervisors%20Jaweria%20Ather%20Securities%20and%20Exchange%20Commission%20of%20Pakistan%20Seoul,%202-3%20November%202004

6th Asian Roundtable on Corporate
GovernanceTheme II, Session 2Ensuring
Capacity, Integrity and Accountability of
Regulators and SupervisorsJaweria
AtherSecurities and Exchange Commission of
PakistanSeoul, 2-3 November 2004
What is Regulation?
  • The OECD definition refers to regulation as a
    diverse set of instruments by which governments
    set requirements on enterprises and citizens
  • Regulation is aimed at correction of market
    failures and protection of public interest
  • Regulators are a third party, overseeing
    transactions between firms and their customers
    mandating limits on the behavior of different
    market players

Why Regulate?
  • Protection of public interest
  • Changing nature and increasing complexity of
    corporate sector
  • Increasing responsibility of and expectations
    from regulators
  • To restore public confidence in the wake of
    financial scams

Why regulate? (contd)
  • Essential nature of some industries
  • Competition might not be sustainable or might
    lead to unstable or undesirable outcomes
  • To ensure quality and availability of services
  • Social and Economic goals
  • Economic development
  • Conservation

Common problems in regulation
  • Vested interests are able to manipulate
    regulatory legislation
  • Volume and complexity of laws
  • Inefficiency and lack of accountability within
    the regulatory bureaucracy
  • Lack of expertise and knowledge on the part of
    regulatory staff
  • Different layers of government imposing
    duplicative, conflicting and excessive regulation

How to go about regulation
  • Regulation should be synthesized with objectives
    and targets for good governance
  • The processes should be transparent and
  • Regulatory procedures should be backed by proper
  • Laws and procedures should be clear and easily
  • Regulatory legislation should take into account
    the interests of all stakeholders
  • All regulatory actions and regulatory procedures
    should be publicly available

What does an effective regulation require
  • Promotion of ethics and culture
  • Planning and performance monitoring
  • Internal accountability
  • External accountability
  • Evaluation

Achieving these goals for effective regulation is
contingent upon capacity, integrity and
accountability of the regulators
  • The regulatory staff knows the law, have
    resources to enforce and is able to take punitive
    action based on sound reasoning
  • Capacity of regulator to carry out effective
    regulation is a function of
  • Legal framework
  • Enforcement powers
  • Regulatory infrastructure

Legal framework
  • Rules and laws must take into account ground
    realities and local conditions
  • Legislation must give protection to regulators to
    discharge there regulatory duties
  • Responsibilities of the regulators must be
    clearly defined and set out by law
  • Laws must be consistent and avoid duplication and

Powers of regulators
  • Power to investigate matters pertaining to
    regulation and obtain data
  • Ability to take action to ensure compliance with
  • Power to initiate or refer cases for prosecution
  • Power to impose sanctions and seek orders from
    courts or tribunals

Regulatory infrastructure
  • Cooperation between various regulatory bodies
  • Regulator should have adequate resources to
    perform its functions
  • Staff of the regulator should be provided with
    the requisite skills and knowledge of law

  • The staff of the regulator observes highest
    professional standards
  • It includes
  • Avoidance of conflicts of interest
  • Appropriate use of information obtained during
    the course of duty
  • Observance of procedural fairness
  • Observance of confidentiality and secrecy

Integrity can be promoted by
  • Adoption of consistent and clear regulatory
  • Promotion of ethical values in regulation
  • Ensuring independence of regulatory authorities
  • Fair remuneration of regulatory staff

  • Regulator being responsible or answerable to
    stakeholders while upholding ethical standards
    and demonstrating financial responsibility and
    operational transparency
  • We need to have a system of accountability of the

System of accountability should ensure
  • Protection of legitimate rights of all
  • A review of the decisions
  • Accountability to public in exercise of powers
    and functions
  • Planning and performance monitoring
  • Public disclosure of policies and procedures

  • Achieving a balance between performance, fairness
    and usage of funds
  • Achieving depth and breadth of skills required
  • Performance management and review
  • Objective evaluation
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