Post on 19-Jan-2016
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Financial Supervisory Commission Chinese Taipei
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Ensuring Capacity, Integrity and Accountability of Regulators and Supervisors Rebecca Chung-Fern Wu,
Ph.D.Financial Supervisory
Commission
Chinese Taipei
Financial Supervisory Commission Chinese Taipei
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OUTLINE
Regulation and Supervision- For Development and Against Fraud
How to ensure the capacity, integrity and accountability of regulators and supervisors (R&S)?What does FSC do?Recommendations
Financial Supervisory Commission Chinese Taipei
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Regulation and Supervision – For Development and Against Fraud
Regulation, Supervision, Examination and Enforcement
Markets Force
Internal Compliance
Financial Supervisory Commission Chinese Taipei
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Regulation and Supervision : Three Layers
Internal Compliance
Markets Force
Regulation, Supervision, Examination and Enforcement
Financial Supervisory Commission Chinese Taipei
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Who are R&S: Framework of the Financial Supervisory Commission
Bureau of M onetary A ffa irs
Securities and Futures Bureau
Insurance Bureau
Exam ination Bureau
F inanc ia l S upervis ory C ommis s ion
E xec utive Y uan
Financial Supervisory Commission Chinese Taipei
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Who are R&S?
Competent authority, exchanges and self-regulatory organizations (SROs) Chinese Taipei
♦FSC, BOMA, SEB, IB, EB ♦TSE, GTSM, TAIFEX, TSCD ♦SFI, SFIPC
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Who are R&S: logo of the FSC• Composed of three colors Green: Energy Blue: Fair, Justice, Public Gold: Prosperous vision of the FSC•Core “F”: Finance, Formosa, Focus•Four blocks : banks, securities, futures, and insurance sectors•The two outside crescents: constant dynamics and infinite development
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Who are R&S: Features of the FSCConsolidated Financial SupervisionJoint Consultation Mechanism Professional Qualification for the Commissioners Integration of Regulations and Policies among Different Financial sectors Combination of Financial Institutions Examinations Investigation Power to Enforce Market Discipline
Financial Supervisory Commission Chinese Taipei
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Who are R&S: EmploymentEmployment of four bureaus of the FSC
Young staff, with an average age of 38.798.03 % of employees’ education level:
college or above
FSC SFB BOMA IB EB
Below College
Level
0 7 3 0 5
College Level 24 99 106 23 181
Graduate Level 20 115 83 30 60
Doctoral Level 3 3 1 0 0
Total 47 224 193 53 246
Financial Supervisory Commission Chinese Taipei
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Numbers of Financial Institutions of Chinese Taipei
0
100
200
300
400
500
84 85 86 87 88 89 90 91 92
Banks
Securities Firms
Insurance Companies
Financial Holding Companies
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Market Value to GDP in Major Stock Markets
Chinese
Taipei
New
York
NASDAQ Tokyo London Hong
Kong
Korea Singapore
1995 71.87 82.76 15.67 68.97 125.63 216.27 40.10 173.30
2000 84.77 117.39 36.61 67.04 181.15 377.58 32.03 168.48
2003 130.57 103.10 25.88 68.72 134.98 456.29 49.07 163.20
Financial Supervisory Commission Chinese Taipei
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Trading Values in Major Stock Markets
Chinese
Taipei
New
York
NASDAQ Tokyo London Hong
Kong
Korea Singapore
1995 378.0 2454.0 1449.3 859.0 930.0 147.0 287.0 77.0
2000 993.3 11060.1 19798.8 2315.5 4558.6 376.7 556.1 95.2
2003 592.0 9692.3 7068.2 2130.7 3624.0 296.4 459.2 92.0
Unit: US$ Billion
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Capacity, Integrity and Accountability of R&S
Humans are essentialadvocate and implement policyestablish principles rules and guidancemonitor, evaluate and examine market players
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Capacity, Integrity and Accountability of R&S
Example:Corporate Governance Best-Practice Principles for TSEC/GTSM listed companies Executive Yuan passed “Accountability for Companies in Chinese Taipei: Policy Agenda and Action Plan” to Strengthen Corporate Governance” (November 12, 2003)
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Capacity, Integrity and Accountability of R&S
Example: Agenda implemented-Established and implemented internal control systems Integrated and strengthened - information transparency of listed companies Established independent directors system Cultivated corporate governance culture and environment Implemented a regulatory system for corporate governance
Financial Supervisory Commission Chinese Taipei
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Relationships among capacity, integrity and accountability
Capacity of R&S
Integrity of R&S
Accountability of R&S
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How to ensure capacity
Capacity
Recruiting
Development
Incentives
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How to ensure capacity
What does FSC do? ♦Recruiting: civil service
examination; high standards or recruiting requirements
♦Job Development: external training program; international meetings exposure; in-house training program
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How to ensure capacity
What does FSC do? ♦Incentives: mainly non-monetary
moderate pay pension plan growth potential achievement job security
Financial Supervisory Commission Chinese Taipei
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How to ensure integrity
Integrity
Monitor Education
Investigation
Legal action & Penalty
Hierarchical Control Social Control
Code of Conduct
Relations
Self- Commitment
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How to ensure integrityWhat does FSC do?
♦Civil Servants: restriction of holding securities (Code of Conduct), Criminal Law, Civil Servant Work Act, Civil Service Employment Act
♦ Commissioners of the FSC: appointed by the President; selected from those with industrial or academic backgrounds of laws, economy, finance, taxation, accounting or management
♦Perform duties independently
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How to ensure accountability
Accountability of R&S is highly associated with the capacity and integrity of R&S Communication and disclosure to ensure the transparency of R&S and then enhance the confidence to the public
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How to ensure accountabilityWhat does FSC do?
♦building the communication access to the public through open meetings and public hearings
♦The regulation and regulatory process are highly transparent
♦crucial policies of the FSC are required to be formulated based on Commission’s decision and announce to the public to ensure the transparency of operations
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Recommendations
How can we choose with the dilemma?
s
High
Low Capacity
High Integrity Accountable
Low Not Accountable
High Capacity
Low Integrity
Low High
(Control ) Integrity
(Education, Motivation)
Capacity
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Recommendations
Lower left: successful recruitment may filter out those with neither capacity nor integrityUpper left: member with high integrity but low capacity--education, training and adequate motivationLower right: dangerous--control mechanismUpper right: best condition--keep the staff
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Recommendations
When capacity and integrity cannot match at the same time:
choose the one with high integrity even if the capacity condition is not satisfied.
R&S cannot take any chance for corruption; or it may harm the confidence of the public and hence attribute to the damage of capital market.
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Thank you
Rebecca Chung-Fern Wu, Ph.D.Financial Supervisory Commission
Chinese Taipei
This is the report of the views of the author. The FSC has expressed no view regarding the analysis, findings, or conclusions herein.