Catalog

	Table of Contents
p. 38 of 58 BACK | NEXT Purpose and Structure of the Toolkit Part One: Introduction and Overview Part Two: Preconditions and Infrastructure for Financial Sector Development Part Three: Financial Regulation and Supervision I. Financial Stability, Development and Institutional Design II. Financial Regulation: General Principles III. Financial Regulatory Structure IV. Banking Regulation V. Bank Insolvency and Depositor Protection VI. Securities and Derivatives Regulation A. International Standards B. Guidance and Recommendations VII. Insurance and Pensions Regulation VIII. Regulation of Financial Conglomerates Part Four: Regional Financial Integration Part Five: ADB's Intervention in the Financial Sector Bibliography Glossary and List of Abbreviations Acknowledgements

Financial Sector Legal and Regulatory Toolkit : Part Three: Financial Regulation and Supervision

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VI. Securities and Derivatives Regulation

Securities activities, in contrast to banking activities, are market-based and require transparency and public disclosure of information for the markets to function well. This information is necessary not only for the accurate valuation of equities and bonds in securities markets, but also for the holders of these securities to protect their rights and to perform a corporate governance role. Weaknesses in all these respects have been important factors in the current global financial crisis.

Standards and institutional structures that promote market transparency generate investor confidence in capital markets. However, in many countries, individual investors lack confidence in their securities markets and in equity investments. Many jurisdictions have not established adequate requirements for information to be provided to investors in connection with public offerings and investment funds. Investors, in turn, are unable to assess the accuracy of the information on which they need to make investment decisions. Failures in the regulatory framework for securities regulation also open the possibility of significant financial fraud and market manipulation in emerging market, developing, transition and developed economies, which negatively impacts prospects for financial sector stability and development.

All developed, emerging, transition, and developing economies have some form of banking system, albeit operating at very different levels of development and playing different roles in their respective economic systems. However, until recently, in most economies, securities markets have been much less developed than banking. (Davis, 2001)

Back D. Bank Insolvency	Next A. International Standards