The busiest bees among capital markets rule-makers appear to be those buzzing around the world’s stock exchanges. While indexes edge lower and companies struggle to meet targets, rule-making seems to be only growth industry around.
In Europe, the EC has just ended the consultation period for its plan to harmonize national listing arrangements. While the aims of the Lamfalussy committee may be laudable, few are happy with the Commission’s plan of action.
It’s a rosier picture in the UK, where the final report of the steering group charged with reviewing Britain’s antiquated company law has been warmly greeted by nearly all observers. Meanwhile, back in Brussels, the EC is trying again to reach a consensus over common pan-European takeover rules. It shouldn’t take too long. The last set of (rejected) proposals only took twelve years to formulate.
In Asia, the China Securities Regulatory Commission (CSRC) has been furiously clamping down on rule breaches by companies and investors riding the roller-coaster Chinese markets, instilling a modicum of control at the Shanghai and Shenzhen exchanges.
So why the current rule-making frenzy? A recent European IR survey (see Measuring up, page 35) found that 77 percent of IROs are content with current regulation. But roughly a quarter of respondents advocate tighter rules on European markets. The market downturn must be playing a part. Just as the Asian crisis of the late 1990s focused minds on corporate practices in the region, the current downturn has put corporate governance in the rest of the world under the spotlight.
In common with other authority figures, market regulators are rarely popular. A senior European IR professional recently griped to me about the drive to regulate the ‘free’ market. Even in the US, where the regulations governing IR activity are arguably at their most strict, few investors and analysts are happy with the level of information companies disclose, as our cover story finds out (Full spectrum communication).
Regulators do not make rules for fun. It’s their job to ensure orderly and fair markets, working for the common good. It’s a shame then that they seem to be making themselves busier than ever during the current market downturn, when goodwill among over-stressed IROs seems to be at a premium.
