Global market watchdogs body to take up social media effect
2 May 2013 3:10 AM GMT
In the wake of instances of social media influencing the capital market, global grouping of securities market regulators IOSCO will look into the issue and deliberate on ways of using such platforms to protect the interest of investors.
The plan to discuss the issue of social media comes against the backdrop of a recent fake message on microblogging site Twitter which led to a sharp sell off in the American stock market.
'We will look at how this idea (of social media) affects capital market and how well it can be used to protect the interest of investors,' IOSCO (International Organisation of Securities Commissions) secretary general David J Wright said.
The influence of social media is a matter of behavioural economics, he added.
According to him, the issue is expected to be discussed at the next meeting of IOSCO members, to be held in Montreal in June this year.Sebi is part of IOSCO.
A fake tweet saying that US President Barack Obama was injured in an explosion at the White House, last month resulted in panic selling of American stocks and going by estimates, about market capitalisation worth $130 billion was wiped off.
Wright was speaking on the sidelines of a public seminar organised by the Asia Pacific Region Committee of IOSCO here.
The event also saw discussions on the topic of innovation in financial sector and regulations.
IOSCO chairman Greg Medcraft said that innovation in financial sector also results in complexities, mainly those related to products, market and technology.
'... we need to make sure that regulators respond quickly to innovation,' he said.
Speaking on the topic, National Stock Exchange's non-executive vice chairman Ravi Narain said that it cannot be assumed always that there is 'trade-off' between innovations in financial sector and regulations.
He also emphasised that risk tolerance of the system is important while coming up with innovations.
Securities Commission Malaysia's Chairman Ranjit Ajit Singh said financial innovation has helped in creating a lot of value for investors. However, he noted that high standards of risk management should be in place while implementing innovation in the sector.
WORKING ON WAYS TO TACKLE REGULATORY ARBITRAGE: SEBI
Terming 'regulatory arbitrage' as an emerging grey area, Sebichairman U K Sinha on Wednesday said such inconsistencies need to be addressed for effective implementation of financial market regulations. Entities operating across jurisdictions of numerous regulators, within and outside the country, are trying to exploit a scenario that has emerged off late and can be called 'regulatory arbitrage', he said.
Sinha said that Sebi is working on more and more intra- region cooperation among the regulators and the Committee has also created a databse of various regulatory actions taken by watchdogs in the region.
'So if any regulator is taking an action and needs help from other regulator in the region, it can consult this databse. All countries have agreed to work together on this front,' he said.
Sinha said that a significant worrying development has been happening with regard to certain international regulators outside the capital markets jurisdiction are taking actions that have impact on the capital markets as well.
Within the country as well, certain entities have been trying to exploit the different rules of different regulators for their benefit and Sebi in the past also has raised concern over such matters.
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SINHA ‘TRYING HARD TO SAVE INVESTORS FROM PONZI SCHEMES’
Amid lakhs of investors who have been defrauded by Ponzi schemes in West Bengal, Sebi chairman U K Sinha on Wednesday said that regulator is working hard to ensure that small investors’ savings are not put to risk.
‘Within the powers given to us, Sebi is working extremely hard to ensure that savings of small investors are not put to risk,’ Sinha said.
The plan to discuss the issue of social media comes against the backdrop of a recent fake message on microblogging site Twitter which led to a sharp sell off in the American stock market.
'We will look at how this idea (of social media) affects capital market and how well it can be used to protect the interest of investors,' IOSCO (International Organisation of Securities Commissions) secretary general David J Wright said.
The influence of social media is a matter of behavioural economics, he added.
According to him, the issue is expected to be discussed at the next meeting of IOSCO members, to be held in Montreal in June this year.Sebi is part of IOSCO.
A fake tweet saying that US President Barack Obama was injured in an explosion at the White House, last month resulted in panic selling of American stocks and going by estimates, about market capitalisation worth $130 billion was wiped off.
Wright was speaking on the sidelines of a public seminar organised by the Asia Pacific Region Committee of IOSCO here.
The event also saw discussions on the topic of innovation in financial sector and regulations.
IOSCO chairman Greg Medcraft said that innovation in financial sector also results in complexities, mainly those related to products, market and technology.
'... we need to make sure that regulators respond quickly to innovation,' he said.
Speaking on the topic, National Stock Exchange's non-executive vice chairman Ravi Narain said that it cannot be assumed always that there is 'trade-off' between innovations in financial sector and regulations.
He also emphasised that risk tolerance of the system is important while coming up with innovations.
Securities Commission Malaysia's Chairman Ranjit Ajit Singh said financial innovation has helped in creating a lot of value for investors. However, he noted that high standards of risk management should be in place while implementing innovation in the sector.
WORKING ON WAYS TO TACKLE REGULATORY ARBITRAGE: SEBI
Terming 'regulatory arbitrage' as an emerging grey area, Sebichairman U K Sinha on Wednesday said such inconsistencies need to be addressed for effective implementation of financial market regulations. Entities operating across jurisdictions of numerous regulators, within and outside the country, are trying to exploit a scenario that has emerged off late and can be called 'regulatory arbitrage', he said.
Sinha said that Sebi is working on more and more intra- region cooperation among the regulators and the Committee has also created a databse of various regulatory actions taken by watchdogs in the region.
'So if any regulator is taking an action and needs help from other regulator in the region, it can consult this databse. All countries have agreed to work together on this front,' he said.
Sinha said that a significant worrying development has been happening with regard to certain international regulators outside the capital markets jurisdiction are taking actions that have impact on the capital markets as well.
Within the country as well, certain entities have been trying to exploit the different rules of different regulators for their benefit and Sebi in the past also has raised concern over such matters.
Â
SINHA ‘TRYING HARD TO SAVE INVESTORS FROM PONZI SCHEMES’
Amid lakhs of investors who have been defrauded by Ponzi schemes in West Bengal, Sebi chairman U K Sinha on Wednesday said that regulator is working hard to ensure that small investors’ savings are not put to risk.
‘Within the powers given to us, Sebi is working extremely hard to ensure that savings of small investors are not put to risk,’ Sinha said.
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