Regulatory Cooperation in Securities Market Regulation: Perspectives from Australia

Abstract

The global financial crisis highlighted the interconnectedness of international financial markets and the risk of contagion it posed. The crisis also emphasized the importance of supranational regulation and regulatory cooperation to address that risk. Yet, although capital flows are global, securities regulation is not. As a 2019 report by IOSCO notes, the regulatory challenges revealed during the global financial crisis have by no means dissipated over the last decade. Lack of international standards, or differences in the way jurisdictions implement such standards, can often result in regulatory-driven market fragmentation. This article considers a range of cooperative techniques designed to achieve international regulatory harmonization and effective financial market supervision. It includes discussion of a high profile cross-border supervisory experiment, the 2008 US-Australian Mutual Recognition Agreement, which was the first agreement of its kind for the SEC. The article also examines some key regulatory developments in Australia and Asia since the time of the US-Australian Mutual Recognition Agreement.