THE WORLD FEDERATION OF EXCHANGES’ STATEMENT ON PROMOTING FINANCIAL STABILITY AND GROWTH THROUGH INTERNATIONAL REGULATORY COHERENCE

Hamilton, Bermuda – June 04, 2019:  The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today published a statement entitled ‘Financial Stability through International Regulatory Coherence’ which discusses cross-border fragmentation arising from unjustified dissonance between jurisdictions’ financial services regimes., the full filing stated the following;

THE WORLD FEDERATION OF EXCHANGES’ STATEMENT ON PROMOTING FINANCIAL STABILITY AND GROWTH THROUGH INTERNATIONAL REGULATORY COHERENCE

WFE statement comes as G20 Finance Ministers meet in Japan to discuss market fragmentation

London, Tuesday 4 June 2019 – The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has today published a statement entitled ‘Financial Stability through International Regulatory Coherence’ which discusses cross-border fragmentation arising from unjustified dissonance between jurisdictions’ financial services regimes.

Promoting international regulatory coherence is strategic priority for the Federation. The WFE’s statement comes days before the G20 Finance Ministers and Central Bank Governors Meeting (8-9 June, Fukuoka), where market fragmentation will form a key part of the agenda. The paper is intended to encourage progress in this area and help shape thinking about solutions. It makes a call to G20 members to enhance transparency, engagement, and accountability via international standard setting bodies, as a means of creating more robust mechanisms to achieve international regulatory coherence.

Specifically the WFE proposes the G20 takes the following actions:

·         Enshrining transparency and due process in an international agreement with a commitment to overcoming international regulatory divergence, avoiding regulatory competition, and censuring politically motivated dissonance;

·         Creating flexible new mechanisms for the escalation and resolution of regulatory dissonance;

·         Embedding international regulatory coherence in the mandates of national authorities;

·         Reporting by ISSBs on addressing financial market fragmentation; and

·         Enhancing dialogue between international standards setters, national policymakers, stakeholder groups and civil society through a structured framework.

Today’s WFE statement, which follows on from its November 2017 paper on international regulatory dissonance, can be summarised as follows:

·         International regulatory fragmentation adds costs, slows innovation, impedes competition, and reduces choice and risk diversification for investors. It may also lessen the resilience of financial markets as a whole, by reducing the scope for risk diversification.

·         It is right that jurisdictions manage risks through rules tailored to their local financial system; however, the means of doing this tailoring should be consistent with agreed global frameworks.

·         Cross-border regulatory co-ordination and deference to comparable standards improves supervision and reduces systemic risk.

·         Crypto assets are an area that would benefit from forward-looking international regulatory standards, to promote investor protection and reduce the possibility of regulatory arbitrage.

Nandini Sukumar, Chief Executive Officer, WFE said: “We welcome the G20 focus on the topic of cross-border financial market regulatory fragmentation, under the Japanese G20 Presidency. The WFE believes that global regulatory coherence can and should be improved, both in substantive and procedural terms. It remains vital to the effectiveness not only of exchanges and clearinghouses but financial services more generally and the wider economy that they support.

“A significant role can and should be played by the international standard-setting bodies, which already provide an outstanding forum for consensus on issues of customer protection, market integrity and systemic stability, all of which provide the bedrock for economic growth. Moreover, these bodies are well placed to address emerging trends, such as digital assets, as well as issues arising from traditional markets.”

You can read the full WFE statement here.

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About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 200 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 43% in EMEA and 20% in the Americas. WFE exchanges are home to nearly 48,000 listed companies, and the market capitalisation of these entities is over $70.2 trillion; around $95 trillion (EOB) in trading annually passes through the infrastructures WFE members safeguard (at end 2018).

The WFE is the definitive source for exchange-traded statistics, and publishes over 350 market data indicators.  Its free statistics database stretches back more than 40 years, and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.  

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.

For more information, please contact:

Anna Watson

Head of Communications, The World Federation of Exchanges 

Email:    awatson@world-exchanges.org

Phone:   +44 20 7151 4137 / 7850 287 685

Twitter:   @TheWFE

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For more information on the Bermuda Stock Exchange (BSX), contact Nancy Vieira at 1-441-292-7212 or nvieira@bsx.com. Information is also available at www.bsx.com and on Bloomberg at BSX <GO> the BSX was founded in 1971 and is the world’s leading fully electronic offshore securities market. The BSX list equities, mutual funds and bonds, depository receipts and derivative warrant securities. The BSX is a full member of the World Federation of Exchanges (WFE) and an affiliate member of IOSCO. In addition, the BSX is recognized by the U.S. Securities & Exchange Commission (SEC) as a Designated Offshore Securities Market under Regulation S; The Financial Services Authority in the UK as a Designated Investment Exchange; HM Revenue & Customs in the UK as a Recognized Stock Exchange; The Bermuda Monetary Authority as a Recognised Investment Exchange and as an Approved Stock Exchange under Australia’s Foreign Investment Funds (FIF) taxation rules.