In our December 2010 edition, we raised two key challenges for 2011: that a number of the proposed reforms could create further regulatory and structural impediments to the proper functioning of the broader financial system and the flow of credit to the real economy, and that 2012 needed to be a year of implementation and certainty. Based on recent developments, we see those challenges as continuing to dominate the market for the year ahead.
The appropriate level of regulation is a fundamental requirement for any economy and its financial system. A proper and consistent system of supervision is even more important. And, luckily, Australia has always been well served in this regard. However, we cannot keep harking back to past achievements, and use that as the basis for arguing for further layers of, or approaches to, inappropriate regulation or supervision. The needs and the challenges of the Australian financial system and economy will be different in 2015.
There are two key concerns. One is that any prolonged uncertainty in supervisory rules, or the application of the regulatory regime, creates unintended business consequences - it either holds back the provision of credit and the development of markets, or requires a financial institution to take more time, and incur greater cost (internal and external, even lawyers!), to do business. The other is that regulation must be coherent, fair and practical in the light of Australian market conditions. The effects of changes in standards for bank liquidity, capital quality, bail-in proposals, newer bank funding tools like covered bonds and the goal of broader, deeper fixed income markets are all heavily interdependent. Piecemeal change in any one area on the basis of foreign precedent may not produce the best results for our markets and the broader economy.
You will hear more about this from us over the next few weeks.
Meanwhile, in this edition of Regulator, Ian Paterson and Anne-Marie Neagle take a look at the new capital products for banks and their impact on the regulatory framework; Jim Boynton and Philip Ward consider APRA's stand in relation to regulatory capital for non-bank institutions; Tim Bednall updates us on the government's executive remuneration reforms and Martin James, Hal Bolitho and Helena Busljeta give us a further instalment on personal property securities reform.
The team at Mallesons hopes that you find this edition of Regulator interesting and informative.
Best wishes
Stuart Fuller, Managing Partner
General content panel
Signpost
Mallesons wins IFLR’s National Law Firm of the Year award
Mallesons was awarded National Law Firm of the Year (Australia) at the 2011 IFLR Asia Awards, announced in Hong Kong earlier this month. This award recognises our ongoing strength and performance in the region. We have won this title consecutively each year between 2003 and 2009. This achievement comes off the back of our recent success in February at the 2010 Finance Asia awards where we were named Best Financial Law Firm.
Directions 2011
Mallesons has launched its inaugural report highlighting the issues and challenges facing Australian boards and directors surrounding board composition, the role of boards and directors, the regulatory landscape and stakeholder engagement. Click here to view the report.