Capital Briefs: World's Bank, Securities Regulators Offer Global Rules

WASHINGTON - securities regulators recommended uniform disclosure standards for derivatives dealers Tuesday. The Basel Committee on Banking Supervision and the International Organization of Securities Commissioners said institutions should report credit risk, liquidity risk, market risk, and earnings. The groups also said regulators should use a common framework to evaluate each institution's exposure. Fed officials said the framework attempts to level the playing field between banks and securities firms by calling on individual countries to establish similar requirements for each industry sector. "The fact that securities regulators and banking regulators have jointly issued this paper is significant," said Christine Cummings, senior vice president at the New York Federal Reserve Bank. "It will be helpful in letting banks and securities firms face a common set of reporting requirements, and also signals the continuing dialogue and cooperation between IOSCO and the Basel Committee." But a securities industry observer was more critical, saying the new disclosure requirements contradict earlier Basel efforts that focus on firmwide risk-management efforts, rather than on particular products. Also, these new disclosure requirements would increase costs. And this observer said bankers don't want to put new burdens on securities firms; rather, they want to reduce the burden on themselves. Karen Shaw, president of the consulting firm ISD/Shaw Inc., said the proposal doesn't resolve the numerous disadvantages U.S. banks face. "Integration remains a significant problem that these regulations can't address," she said. "It's a much bigger one."