Global reform of supervisory standards should be at the centre of G20 summits with "no tolerance" for jurisdictions that make an insufficient effort to improve.
The International Institute of Finance argues that the banking industry is "prepared to meet" the significant new costs that this will create and is keen to work out a code of best practice to foster the best quality of supervision on its firms.
IIF members include heavyweights Deutsche Bank, HSBC, Morgan Stanley and BNP Paribas. The banking trade body - which is currently negotiating private sector involvement in the Greek bailout - says that high quality supervision is a "common interest and a shared responsibility," which the banking industry needs to recognise and act on.
"There must be no tolerance of jurisdictions with insufficient supervisory quality or resources, and active measures to tackle any weaknesses here," Peter Sands, chair of the IIF special committee on effective regulation and group chief executive of Standard Chartered, writes in the report, released on Tuesday.
"Achieving all of this may entail significant new costs, but the industry is prepared to meet these if they deliver the kinds of improvements sought.
"The industry has a major responsibility to ensure that supervision is credible and effective. Individual firms and the industry as a whole must do much better than in the past."
The report also recommends 12 principles that can be used to ensure more effective cooperation between the industry and its overseers.
It believes firms should be open in communicating up-to-date industry-wide technical information as well as being proactive in sharing sound industry practices.
It says that banks should interact with supervisors on the basis of "no surprises", meaning they should be open in sharing any candid assessments of the main risks they face.
They should also alert supervisors to any actual or prospective changes in their risk profiles, it says.
"Well-run firms have every reason to welcome strong and effective supervision. This additional focus on the company in addition provides the management of a firm with a valuable alternative perspective," the report continues.
Source: http://www.gfsnews.com
The International Institute of Finance argues that the banking industry is "prepared to meet" the significant new costs that this will create and is keen to work out a code of best practice to foster the best quality of supervision on its firms.
IIF members include heavyweights Deutsche Bank, HSBC, Morgan Stanley and BNP Paribas. The banking trade body - which is currently negotiating private sector involvement in the Greek bailout - says that high quality supervision is a "common interest and a shared responsibility," which the banking industry needs to recognise and act on.
"There must be no tolerance of jurisdictions with insufficient supervisory quality or resources, and active measures to tackle any weaknesses here," Peter Sands, chair of the IIF special committee on effective regulation and group chief executive of Standard Chartered, writes in the report, released on Tuesday.
"Achieving all of this may entail significant new costs, but the industry is prepared to meet these if they deliver the kinds of improvements sought.
"The industry has a major responsibility to ensure that supervision is credible and effective. Individual firms and the industry as a whole must do much better than in the past."
The report also recommends 12 principles that can be used to ensure more effective cooperation between the industry and its overseers.
It believes firms should be open in communicating up-to-date industry-wide technical information as well as being proactive in sharing sound industry practices.
It says that banks should interact with supervisors on the basis of "no surprises", meaning they should be open in sharing any candid assessments of the main risks they face.
They should also alert supervisors to any actual or prospective changes in their risk profiles, it says.
"Well-run firms have every reason to welcome strong and effective supervision. This additional focus on the company in addition provides the management of a firm with a valuable alternative perspective," the report continues.
Source: http://www.gfsnews.com
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