Regulatory transparency provides security, predictability and inspires clear objectives says Emily Altman, principal director of international government relations with Morgan Stanley. She made the comment last week in a speech at the International Organization of Securities Commissions Annual Conference in Stockholm.

“The costs of opacity, to countries and to markets, are huge. In fact, too huge to ignore,” she said. “Clear and understandable regulations provide market participants with predictability and the knowledge to comply with regulations. Regulatory transparency serves the healthy goal of requiring regulators to articulate their regulatory objectives. Opaque or ambiguous regulations and rulings create uncertainty, and uncertainty is an enemy of the capital markets.”

Appearing on behalf of the U.S. Securities Industry Association, Altman said, “We believe transparency makes for better regulation. We believe our input can help make regulation better. Frankly the greater the range of interested parties that is solicited for input both inside and outside the market–the more prepared regulators will be and the better the resulting regulation will be.”

The SIA is proposing a vision of regulatory transparency in several basic principles:

> rules, regulations and licensing requirements should be imposed, and regulatory actions should be taken, only for the purpose of achieving legitimate public policy objectives that are expressly identified,

> regulation should be enforced in a fair and non-discriminatory manner,

> regulations and regulators should not discriminate among licensed market participants on the basis of the nationality or jurisdiction of establishment,

> the relationship between a regulator and a market participant should be governed by the standards set forth in relevant rules,

> the introduction of new securities products and services by firms should be governed by the standards set forth in relevant rules,

> regulations should be clear, understandable and publicly available at all times,

> regulators should issue and make available to the public final regulatory actions and the basis for those actions, in order to enhance public understanding,

> regulators should use open and public processes for consultation on proposals for new regulations.

However she conceded, “we know there are, and must be exceptions to regulatory transparency in order to protect market participants and to protect regulators. Formulating those exceptions, without eviscerating the system, is one of the hardest challenges of all.”