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EBRD to hold seminar on securities laws
Bank assesses how far ex-communist states have adopted global norms
How reliable are securities laws and regulations in the emerging markets of
central and eastern Europe and the CIS? How close have these 27 countries come
to adopting international best practice ensuring the protection of investors;
transparency and efficiency; and the reduction of systemic risk?
The EBRD’s Securities Markets Legislation Assessment for 2004 provides
answers. As part of the Bank’s efforts to better understand the legal
environment and developments in the group of countries whose eight westernmost
members have already joined the European Union, it has conducted a detailed
300-question survey in each, showing how closely legislation dovetails with
the worldwide principles set out by the International Organisation of
Securities Commissions (IOSCO).
Michel Nussbaumer, the Bank’s Head of Legal Transition, will chair a seminar
on the findings on 29 November 2004, from 17.00 – 18.30. Lawyers and legal
journalists are invited.
The 2004 report rates countries’ current levels of compliance with
international norms from 1 (countries that either have no stock market or one
that is non-functioning, with ambiguous legal rules, scant supervision and no
laws to protect investors) to 5 (very high compliance, with comprehensive
securities legislation conforming to international standards).
None of the countries assessed, even the eight May 1 entrants to the EU, were
judged to have reached this highest level. But five – three of the new EU
entrants Estonia, Lithuania and Slovenia, as well as Croatia and FYR Macedonia
– were seen as having reached Group Four, with minor progress and refinements
still to be made but with the essential keystones in place. The rest of this
year’s accession countries, along with Romania and Bulgaria (which like
Croatia are waiting for admission in 2007), and Armenia, Bosnia & Herzegovina,
Georgia, Kazakhstan, Russia, Serbia & Montenegro, Ukraine and Uzbekistan, were
rated as Group Three – medium compliance.
One explanation for the surprisingly low scores of some of the new EU member
states, the assessment suggests, may be that they were among the earliest to
implement basic securities laws. Countries heading for fast-track EU accession
needed to meet a minimum threshold of capital markets legislation in the
mid-1990s. But the focus of EU accession was more on achieving economic and
democratic thresholds than sophisticated securities law. So countries that
have brought in securities regulations more recently score higher for
sophistication – yet the effectiveness of their laws has not yet been tested.
“Without attempting any pre-judgement, it cannot be excluded that some EU
accession countries may achieve greater success in implementing their ‘medium
compliance’ laws than other transition countries with more recent and
extensive securities legislation,” the report says.
The assessment’s country-by-country analysis offers guidelines on where new
legislation is needed to bring laws up to date and stimulate investment by
maximising financial attractiveness. Through this project, and similar
assessments of other core legal areas, the EBRD aims to encourage, influence
and provide guidance to governments, policy-makers and those in charge of
promoting legal reform across the region.
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