Sai Sireesh – Regulatory Vision 2020 – Top 10 list

I am a keen follower of the Australian regulator APRA that in my mind certainly ranks amongst the thought leaders in regulatory thinking.  APRA has been at the forefront of many new regulatory concepts and pro-active adoption. Its current focus is on 3 major areas - Financial stability and systemic risk, Group Supervision, Remuneration.  Their approach to reform being best captured by how they term it – “ just right‟ – "not too much, not too little.“

Below is the my list of 10 areas that will serve as foundation for APRA’s 2010-2020 blueprint. This list is based on my reading of their consultative papers and speeches in 2010.

  1. Twin Peaks model - Continued enhancement and evolution of the twin peaks regulatory model – APRA (Australian Prudential Regulatory Authority) and ASIC (Australian Securities and Investments Commission)

  2. Risk of Complacency - Proactive watch against risk of complacency by maintaining the intensity of supervisory rigor in their own activities as well as industry

  3. Financial stability and systemic risk – APRA has an active role in the G20 Financial Stability Board as well as IAIS coordinated Financial Stability Task Force to review principles around - quality of liquid assets, longer survival horizon, longer-term funding

  4. Inherent pro-cyclicality in prudential frameworks

  5. Means to address the “too big to fail” problem

  6. Concept of macro-prudential supervision and surveillance

  7. Effective cross-border cooperation

  8. Group Supervision – legislative power, effective regulatory frameworks, supervision capability for conglomerate groups

  9. Risk Management oriented Sound Remuneration Policies and related Prudential Requirements

  10. MOU on financial distress management with other regulatory bodies– both within country and cross border

I have tried my best to capture the essence of their thinking, let me know if I have done full justice to their thought leadership or not!

Source: APRA consultative papers and speeches:

  • Role of the Prudential Regulator 2010-2020, Helen Rowell, GM, Policy Development

  • Reform of Global Banking Regulation – Wayne Byres, Exec. GM, Diversified Institutions Division

  • Regulatory Update 2010 – John Trowbridge, Executive Member, APRA

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