Business call for voluntary rules on international
financial transactions
Londo
n, 15 June 1998
- The chief legal officer of Lehman Brothers Inc. called on governments and
business to cooperate in setting voluntary guidelines for international financial
transactions and proposed the International Chamber of Commerce (ICC) as the
business partner.
Tom Russo, a managing director at Lehman Brothers,
said the guidelines should apply specifically to over-the-counter (OTC) derivatives
transactions. He stipulated that they must be universally acceptable and in
step with the increasing pace of change in today’s global financial markets.
Mr Russo was addressing the ICC Financial Services
and Insurance Commission. ICC commissions are made up of corporate executives
and experts who meet to formulate ICC policies on international business issues.
He told the commission: "The regulatory landscape
governing the global financial services marketplace remains utterly confusing
and conflicting. The fundamental problem is the existence of contradictory regulatory
and self regulatory structures throughout the world…it would be far preferable
to be subject to a single body of rules that would embody best practice."
He said that the International Chamber of Commerce
should be the business contributor to the guidelines: "ICC’s representation
is broad and includes significant membership from end-users in the market. After
all, most derivative products are developed primarily for their benefit."
Mr Russo also said that on the government side,
the Group of Eight should start the initiative by bringing together other governments,
international regulatory bodies such as the OECD, and industry players. The
aim should be worldwide compliance and adaptability to evolving market conditions.
Mr Russo pointed out that the core objective should
be to achieve transparency in the basic legal and regulatory structures governing
countries’ financial transactions. Noting the importance of reliable data
in financial decision-making he said: "Fear fuels risk and volatility,
whereas knowledge is often the antidote to fear."
Additionally, Mr Russo recommended that risk management
systems be enhanced to go beyond market and credit risk analysis tools to provide
a total picture of the business environment as it affects investment. These
risk assessments would then be used by independent public accountants to address
the broader issue of systemic risk.
Mr Russo is a managing director at Lehman Brothers
and a member of the Corporate Management Committee. Among other responsibilities,
he oversees the firm’s Corporate Advisory Division. Prior to joining Lehman
Brothers, Mr Russo was a partner in the Wall Street law firm Cadwalader, Wickersham
& Taft.
ICC is the world’s foremost developer of international
self-regulatory guidelines for business practice. With over 7000 company members
in more that 130 countries, ICC promotes an open international trade and investment
system and the market economy worldwide.