Good corporate governance underpins the integrity and transparency of the financial sector, both for financial institutions and other organisations that access capital markets. In addition, firms perform better in an environment of accurate and timely information availability and dissemination. It is essential therefore that financial institutions are governed in a manner that ensures protection of the stakeholders in the financial sector.

Corporate governance
Corporate governance standards continue to be strengthened across the region in line with the higher international standards that have been placed on Boards of Directors and senior management in response to greater demands for accountability and integrity.

Each of the regulatory authorities has initiated improved standards for corporate governance based on the global standards and requirements of international organisations such as the OECD, BIS, IAIS and IOSCO. The regulatory authorities will review their governance frameworks and take steps to ensure further harmonisation of corporate governance practice in line with international best practice.


Strengthening transparency
The regulations governing disclosure will cover all activities that have significant impact on securities markets. Issuers of debt and equity should provide sufficient information to investors in order for them to make informed and timely decisions. In order to support these objectives, financial regulators should have clear and comprehensive rules and procedures guiding market disclosure practices, transparency and the quality of information. Any public disclosure must be made in a clear, accessible and usable manner.

In order to better align the interests of investors and regulated entities, compensation structures should be publicly available as well as any performance payments that are linked to the durability and long-term viability of profits. Misaligned incentives can encourage regulated entities to take advantage of information asymmetries and put their interests ahead of their clients. This can result in mispriced risk or inappropriate product selection.

Appropriate steps will be taken by the regulatory authorities to ensure that standards are aligned with international best practice, that a robust compliance culture is promoted at firms, and that any market activity which is detrimental to investor confidence is detected and addressed.

Reinforcing disclosure practices
Financial markets are often characterised by asymmetric information which hinders efficient market outcomes. In order to alleviate the problems arising out of asymmetric information flows, greater transparency and disclosure standards are essential.

This will be facilitated by the establishment of rigorous standards governing disclosure practices, particularly with regard to valuations and risks. In this regard, the QFMA will undertake more active enforcement of rules regarding product disclosure and risks. Moreover, the current practice for disclosing information on companies obtained by external auditors will be reviewed.