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Governance of securities regulators : a framework, Volume 1
 
Author:Pratt, Richard; Berg, Alexander; Country:World;
Date Stored:2014/03/10Document Date:2014/03/01
Document Type:Policy Research Working PaperSubTopics:Public Sector Corruption & Anticorruption Measures; Emerging Markets; National Governance; Debt Markets; Public Sector Regulation
Language:EnglishRegion:The World Region
Report Number:WPS6800Collection Title:Policy Research working paper ; no. WPS 6800
Volume No:1  

Summary: This paper reviews the published work on the governance of regulatory authorities in order to identify the basic governance standards that apply and some of the factors that affect the implementation of good governance. There are four pillars of good regulatory governance: independence, accountability, transparency, and integrity. The regulator should be operationally independent from commercial and political influences in the exercise of its functions and powers. Accountability is the means whereby a regulatory authority is held responsible for the actions it takes. Transparency refers to the publication of relevant information designed to demonstrate consistency and openness. The fourth governance pillar, integrity, refers to the internal processes that the authority adopts to ensure there is discipline and consistency in its operations and to limit the risks of regulatory staff acting in their own self-interest as opposed to that of the authority and the market. These four elements are mutually reinforcing, in that accountability is necessary to provide legitimacy to independence, transparency is necessary to demonstrate that independence does not lead to abuse or improper behavior, and integrity is necessary to provide the discipline to control the exercise of independent powers. Available evidence suggests that independence and accountability are far from being universally applied in practice. The paper concludes with some practical suggestions that experience indicates are likely to enhance the effectiveness of the governance of securities regulators. Good governance of the securities regulator is necessary for effective regulation. It is also of importance in setting an example to encourage good corporate governance in the private sector.

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