By Yoon Ja-young
Staff Reporter
The competitive success of any financial market depends on effective regulation, said Robert Glauber, former chairman and CEO of the U.S. National Association of Securities Dealers, at the International Council of Securities Associations (ICSA) annual meeting Monday.
The visiting professor at Harvard University said getting the balance right between safety and cost is the key to effective regulation. ``In the U.S. financial markets, the prominent event has been the credit market's crisis, originating in heightened defaults in subprime mortgages. This credit crisis has transformed the focus on regulation,'' Glauber said at the meeting held in downtown Seoul.
Around 70 international financial experts from 23 countries participated in the meeting, which was held in Seoul for the first time since 1997. ``Korea's capital market has made remarkable growth since 1997, when the annual meeting was held in Seoul,'' said Korea Securities Dealers Association Chairman Hwang Kun-ho in an opening speech. He pointed out that the stock price index broke 2,000 points last year, marking a notable growth from mere 376 points at the end of the 1997. Market cap expanded to $1 trillion from $78 billion a decade ago, according to Hwang.
The Harvard visiting professor Glauber said self-regulation can be more effective than direct government regulation. ``It can be persuasive and subtle in its conditioning influence over business practices and business morality,'' he said.
However, there are challenges, according to Glauber. ``Most obvious is the conflict of interest that must arise when the industry is asked to oversee itself.''
He also pointed out that self regulatory organizations could lack power to discipline industry members as there could be problems such as whether the industry can withdraw funding faced with tough regulation or whether there is unnecessary overlap and excessive costs.
Dominic Barton, chairman of McKinsey & Company Asia, expected the rise of the Asia's financial markets, which have undergone a significant transformation since the financial crisis in 1997. Barton estimated Hong Kong, Shanghai, Singapore, Seoul, and Tokyo to push to increase their share and centrality as financial centers in Asia.