KUALA LUMPUR: Greater inclusiveness and diversity in capital markets must be further promoted to build stronger systemic stability and resilience in the sector, said Securities Commission (SC) chairman Datuk Ranjit Ajit Singh.
He said capital markets need to have the capacity to withstand periods of stress and uncertainty and, as such, the need to strengthen resilience has become more acute.
In his speech at the World Capital Markets Symposium 2013, hosted by the SC, Ranjit noted that through constant innovations in finance and technology, markets are becoming more interconnected and interdependent.
He said a robust and effective regulatory framework is critical in building systemic resilience in the capital markets but resilience also depends on the internal composition of markets.
"This means encouraging greater participation by a wider group of investors, promoting greater diversity of financial and ancillary services and providing innovative solutions to meet the financing needs of a broader range of businesses."
Ranjit said there is a need for international coordination within the capital markets, given the increasingly cross-border nature of markets and its risk to ensure that regulatory responses do not generate adverse unintended consequences.
"To achieve this, decisions must be made in a manner that is wider and more inclusive," he said adding that Asia and emerging markets have to play a more active and decisive role in shaping the architecture of international finance.
"Only then can we collectively arrive at solutions that are truly effective and globally relevant."
Ranjit said even after five years since the collapse of Lehman Brothers, markets still need to be redefined while trust and confidence have yet to be fully restored.
"In our view, it is clear that for markets to regain their vibrancy, the following three imperatives are critical: sustainability, inclusiveness and systemic resilience," he said, adding that one of the key challenges now is re-engaging markets with the real economy.
Ranjit said to achieve this, issues of sustainability and growth are strongly vital for emerging markets like Malaysia as the capital market plays a crucial role in driving the structural economic transformation of these countries.