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Ensuring Capacity, Integrity and Accountability of Regulators and Supervisors . Rebecca Chung-Fern Wu, Ph.D. Financial Supervisory Commission Chinese Taipei. OUTLINE. Regulation and Supervision- For Development and Against Fraud

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ensuring capacity integrity and accountability of regulators and supervisors

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

outline
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

slide3

Regulation and Supervision –

For Development and Against Fraud

  • Regulation, Supervision, Examination and Enforcement
  • Markets Force
  • Internal Compliance

Financial Supervisory Commission Chinese Taipei

regulation and supervision three layers

Internal

Compliance

Markets Force

Regulation, Supervision, Examination

and Enforcement

Regulation and Supervision : Three Layers

Financial Supervisory Commission Chinese Taipei

who are r s framework of the financial supervisory commission
Who are R&S: Framework of the Financial Supervisory Commission

Financial Supervisory Commission Chinese Taipei

who are r s
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

Financial Supervisory Commission Chinese Taipei

who are r s logo of the fsc
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

Financial Supervisory Commission Chinese Taipei

who are r s features of the fsc
Who are R&S: Features of the FSC
  • Consolidated Financial Supervision
  • Joint 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

who are r s employment
Who are R&S: Employment
  • Employment of four bureaus of the FSC
  • Young staff, with an average age of 38.7
  • 98.03 % of employees’ education level:
  • college or above

Financial Supervisory Commission Chinese Taipei

numbers of financial institutions of chinese taipei
Numbers of Financial Institutions of Chinese Taipei

Financial Supervisory Commission Chinese Taipei

market value to gdp in major stock markets
Market Value to GDP in Major Stock Markets

Financial Supervisory Commission Chinese Taipei

trading values in major stock markets
Trading Values in Major Stock Markets

Unit: US$ Billion

Financial Supervisory Commission Chinese Taipei

capacity integrity and accountability of r s
Capacity, Integrity and Accountability of R&S
  • Humans are essential
  • advocate and implement policy
  • establish principles rules and guidance
  • monitor, evaluate and examine market players

Financial Supervisory Commission Chinese Taipei

capacity integrity and accountability of r s14
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)

Financial Supervisory Commission Chinese Taipei

capacity integrity and accountability of r s15
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

relationships among capacity integrity and accountability
Relationships among capacity, integrity and accountability

Financial Supervisory Commission Chinese Taipei

how to ensure capacity
How to ensure capacity

Financial Supervisory Commission Chinese Taipei

how to ensure capacity18
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

Financial Supervisory Commission Chinese Taipei

slide19

How to ensure capacity

  • What does FSC do?
  • ♦Incentives: mainly non-monetarymoderate pay
  • pension plan
  • growth potential achievement
  • job security

Financial Supervisory Commission Chinese Taipei

how to ensure integrity
How to ensure integrity

Financial Supervisory Commission Chinese Taipei

how to ensure integrity21
How to ensure integrity
  • What 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

Financial Supervisory Commission Chinese Taipei

how to ensure accountability
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

Financial Supervisory Commission Chinese Taipei

how to ensure accountability23
How to ensure accountability
  • What 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

Financial Supervisory Commission Chinese Taipei

recommendations
Recommendations
  • How can we choose with the dilemma?

(Education,

Motivation)

Integrity

(

Control

)

Low Capacity

Accountable

High

High Integrity

High Capacity

Not Accountable

Low

Low Integrity

Capacity

Low

High

s

Financial Supervisory Commission Chinese Taipei

recommendations25
Recommendations
  • Lower left: successful recruitment may filter out those with neither capacity nor integrity
  • Upper left: member with high integrity but low capacity--education, training and adequate motivation
  • Lower right: dangerous--control mechanism
  • Upper right: best condition--keep the staff

Financial Supervisory Commission Chinese Taipei

recommendations26
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.

Financial Supervisory Commission Chinese Taipei

thank you

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.

Financial Supervisory Commission Chinese Taipei