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.