17th Melbourne Money and Finance Conference 2012: Financial Regulation: Global trends and domestic policies

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The conference, first held in 1987, has provided a forum for Australia’s foremost financial experts to discuss the key issues facing the financial services industry. The latest instalment saw approximately 60 invited delegates freely express their views on the likely outcomes of a suite of impending regulatory changes. The diverse audience included members of industry, regulatory bodies and academia.

The specific implications of the post-GFC shift toward increasing faith in regulation were contested throughout the event, with the trend toward global standard setting of regulatory requirements, led by the G20, an issue of some concern. The benefits of the Basel III liquidity capital ratio, the implementation of Central Clearing Parties for Over-the-Counter (OTC) markets and the proposed regulation of Dark Pools all faced intense scrutiny.

Opinions were more divided when discussing the Future of Financial Advice (FoFA). While there was general consensus that ensuring fees correspond to the level of service being provided is important, there was concern that there is nothing in the FoFa reforms to suggest that the overall quality of financial advice will improve. One delegate noted that any superannuation reform that did not address this issue could not constitute, as Bernie Ripoll suggested, a revolutionary and once-in-a-generation change to our financial services sector. Views toward MySuper were generally positive, however the continued similarity of asset allocation and hence market risk involved in pre and post-retirement superannuation products was highlighted as a problem that is yet to be addressed and is an increasing threat given the impending retirement of the baby boomer generation.

The event closed with a discussion on the proposed mandatory periodic disclosure of Superannuation Fund asset holdings, a change that almost all delegates agreed would be beneficial. It was argued that while strict disclosure requirements would require Superannuation Funds to implement more sophisticated reporting systems, the opacity of Australian Superannuation holdings is archaic and undesirable. The example of US funds which have been required to disclose complete portfolio holdings since the 1940s provided evidence to this claim. Almost all delegates agreed that the benefit to members of greater fund transparency would outweigh any additional costs associated with providing the disclosure.

Papers presented:

  • Financial Regulation since the Global Financial Crisis, Ian Beckett (Treasury)
  • Identifying shortcomings in the regulatory regime, Nicholas Hossack (Australian Bankers’ Association)
  • Liquidity Regulation: Lessons from New Zealand, David Tripe (Massey University)
  • Liquidity Buffers of Australian Banks?, Joel Grant (APRA)
  • Financial Regulation and Australian Dollar Liquid Assets, Alex Heath (Reserve Bank of Australia)
  • OTC Derivatives in a Post GFC world: Australia’s commitment to the G20, David Robinson (Monash)
  • Dark Liquidity – an evidence based response, Damian Jeffree (AFMA)
  • New Zealand Insider Trading Regulation: A Market Assessment, Bart Frijns (Auckland University of Technology)
  • Consumer Financial Protection, Ros Grady (CIFR)
  • The Usefulness of Risk Profile Questionnaires in Financial Advising, Tom Valentine (Macquarie Graduate School of Management)
  • The Future of Financial Advice and MySuper, Geoff Kingston (Macquarie University) and Hazel Bateman (UNSW)
  • Disclosure of Superannuation Fund Holdings: What would be best?, Alex Erskine and Clare Marlin (ASIC)

The 17th Melbourne Money and Finance Conference was held on 16 – 17 July 2012, sponsored and supported by APRA, Finsia and the Reserve Bank of Australia. Papers presented at the conference will be available on the website and in Issue 3 and 4 of JASSA, Finsia’s quarterly Journal of Applied Finance.

The Melbourne Money and Finance Conference is a unique conference series that brings together invited academics, industry participants and regulators under the Chatham House rule to discuss specially prepared and selected papers on emerging matters of significance in the finance sector.