The Emerging Markets Dialogue brings together emerging market stakeholders, such
as supervisory authorities, stock exchanges, corporations and international
organizations, to jointly develop concrete solutions in thefinancial sector. This
dialogue on investor protection in capital markets strives to complement existing
processes, such as the G20 meetings on a working level.
In this context, on 28th and 29th of October, 2013 the Securities and Exchange
Board of India (SEBI), the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)
and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), on behalf
the German Federal Ministry of Development and Cooperation (BMZ), jointly
conducted a high level regional conference on investor protection in capital markets.
The main focus was on best practices and core issues relating to investor protection
from the Asian as well as the European perspective. The Goal was to provide an
opportunity for regulators, policymakers, international standard setting bodies, market
participants, stock exchanges as well as other stakeholders to share their knowledge
and experience and to discuss measures to improve the investor protection regime.
Participants came from across Asia, including India, China, Indonesia, Vietnam,
Japan, Hong Kong, Mongolia, Sri Lanka, and Maldives as well as from Germany,
Italy and Spain (IOSCO)
The Conference on day one addressed issues of new trends in capital market
regulation, investor education, disclosure and transparency and other regulatory
measures to prevent misselling of financial products, as well as dispute resolution
regime and Mediation and Arbitration. Day two of the conference focused on Investor
compensation funds as well as stock exchange surveillance.
Five Important principles highlighted by Mr. Sinha, chairman of SEBI, include:
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Equitable and fair treatment of investors
Disclosure and transparency
Financial education and awareness
Protection against fraud
Mechanism of redressal
Some of the emerging Risks as identified by IOSCO include
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Risks associated with low interest rate environment and search for high yield.
Risk associated with collateral management
OTC derivative space
Reversal of capital flows to the emerging markets
Mr. Karl-Burkhard Caspari commended India on its feat of surveillance of 50 million
retail investors and their direct linkage and financial education.
Some of the Key Outcomes from the Conference were:
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Regulators are faced with the complexity of products and financial innovation
and aspects of product intervention, which may lead to the (potential) change
of the regulator’s point of view from focusing on the point of sale to product
governance.
Studies have shown that Product brochures are not read by many and hence
a Key Information Document (KID) is important. Investors spend approx11% of
their time on the selection of financial products as opposed to 80% on
Commercial goods e.g. mobile phones
Cross border protection as well as cross border surveillance work well within
Europe but should and need be extended beyond Europe.
The conference was a unique opportunity for regulators, policymakers, international
standard setting bodies and market participants to share knowledge and experience
and to discuss measures to improve investor protection.
The feedback is overwhelmingly positive, 80 percent confirmed that expectations
were met and more than half of the participants assured that the conference was of
direct relevance to their work.
The Emerging Markets Dialogue will continue in 2014, in order to enhance the
dialogue among advanced economies and emerging markets to highly relevant G20
financial sector issues.