The key to progress was the joint recognition by market regulators and supervisors that earlier identification of credit losses is consistent both with financial statement users’ needs for transparency regarding changes in credit trends and with the prudential objective of safety and soundness.19 In the other direction, bank supervisors have typically insisted on the vital confidentiality of the information they receive, while securities regulators emphasise transparency. One could argue that, in many countries, the bank supervisors have done too well in this debate. That was brought home to me some years ago when, in a previous existence at the Bank of England, my then team realised that we could analyse large and complex firms most easily using disclosures made under SEC rules. As announced last week in the joint Bank of England/FSA document on how the future Prudential Regulation Authority will approach banking supervision, we plan in the future to publish prudential returns to the extent possible. Shadow banking and the prudential perimeter My second point about firms concerns shadow banking, defined to mean non-bank firms or structures that replicate the monetary and/or credit services of banks in some way, involving maturity transformation and/or leverage20. 18  See Recommendation 19, FSB Report on Implementing OTC Derivatives Reforms (2010); and the recommendations of the FSB’s Data Gaps and Systemic Linkages Group.
In some jurisdictions, such as the UK, the securities regulator is the listing authority. In others, such as the US, listing documentation is approved by exchanges, with minimum disclosure requirements set by the securities regulator. This is tied up with whether regimes retain an element of Self-Regulatory Organisations. 9  In the UK, although the FSA was given a “financial stability” objective in 2010, it did not apply to its functions as UK Listing Authority. The proposed objectives of the planned new securities and conduct regulator, the FCA, are intended to apply to the UKLA. 10  IOSCO Objectives and Principles of Securities Regulation (2010). 4  BIS central bankers’ speeches  whole in ways that are opaque to everyone. For example, in the USA, as the SEC has commented, a lot of structured-finance products, including pretty well all CDOs and AssetBacked CP, were issued privately and so were exempt from a panoply of disclosure requirements that apply to “registered” offerings.11 Reducing that opacity, and ensuring the integrity of these market mechanisms, could well be in the interests of investors in private placements themselves. This issue is not easy. On the one hand, it is reasonable for the regulatory regime to make allowance for private transactions amongst “consenting adults”. And the issuance of small amounts of any type of security cannot possibly jeopardise stability.