IFSA Conference – Convergence drives regulators

Convergence and the digital revolution in global capital markets are becoming the drivers of regulatory regimes throughout the world, according to Professor Ian Harper of the Melbourne Business School.

Convergence is a blurring of trading in financial services that is leading to parallel developments in the regulatory arena, Harper says.

"This is producing integrated regulators like APRA. The UK, Canada, Japan, Korea and Singapore are all looking at similar models," he says.

A further example of convergence is occurring in interest rates where central banks are seen as the authority to set monetary policy. Harper says integrated regulators will play a much bigger role in the future, with bodies like APRA being seen as a regulator for Asia Pacific, not just Australia.

The chief items on the agenda of an integrated regulator will be how the body deals with a conglomerate and how to treat unregulated financial entities.

The digital revolution is also causing headaches for regulatory bodies globally. Harper believes the global regulators are foxed as to how to deal with e-commerce, especially at the rate of growth being seen at present.

"Regulators are trying to apply principles but are ignoring the media," he says.

"They are trying not to impede the growth of electronic commerce on the Internet."

This is a view that is strongly challenged by Australia's own regulator, Alan Cameron from ASIC who says the regulators understand their role - just that they will need a lot of resources to meet the goals.

All these driving forces will mean regulations will be more integrated, more market-orientated and more co-ordinated internationally, Harper says.