Accounting standard seen as key to securities growth

Accounting standard seen as key to securities growth

MANILA (AFP): Disclosure and international accounting standards would enhance the attractiveness of Asian securities markets, particularly those in developing countries, experts said at an international conference here yesterday.

Speeches given at a conference on securities market regulation, sponsored by the Asian Development Bank (ADB), which began on Monday, hammered at the need for a financial disclosure system conforming to international accounting standards.

Alphonse Sommer, a former US Securities and Exchange Commission (SEC) official, said that although there was no perfect model, developing countries seeking to lure investors from developed nations would be more successful by making accounting standards conform to those of developed nations.

Sommer, who headed an advisory committee on corporate disclosure, also cited the heavy reliance of disclosure in securities regulation, both to inform investors and to ensure proper conduct of issuing corporations.

Jean-Claude Delespaul, secretary-general of the Commission des Operations des Bourse of France, said that as part of the transparency needed, a public regulator must be empowered to examine "shadow areas" and have the power to disapprove public offerings.

However, such a regulator must be independent from both the political leadership and the body in charge of operating the capital market, he said.

Day Linin, chairman of Taiwan's SEC, warned that "in many emerging markets ... mere compliance with disclosure requirements may not be enough" to prevent fraud, making it more important for the SEC to review every offering.

With the expansion of the economy, the SEC eventually found it did not have enough personnel to handle all such offerings, he said, arguing that it was more efficient for the participants to police each other according to set criteria announced by government.

Sommer also said that developing nations might also be interested in adopting "some degree of merit regulation" to help investors weed out low-quality offerings that might weaken investor confidence in the market.

Indonesia

But Bacelius Ruru, chairman of Indonesian Capital Market Supervisory Agency, noted that his country switched from merit to non-merit regulation in 1990, "based on the principle of full disclosure."

Ruru emphasized that his country's securities regulators made all relevant information available while leaving investment decisions entirely to the investors.

He admitted that some Indonesian issuers were preparing to make securities offerings in foreign countries, but this had been complicated by different national procedures, particularly in accounting and disclosure standards.

Ruru said that, as a result, Jakarta was considering the applicability of international standards recommended by the International Organization of Securities Commission.