Latin American Capital Markets

266 ANDREW HOOKmeet the requirements of supervisors. This can involve supervisory review of themodernization initiative at different phases. In some cases, in Brazil or Colombia, forexample, the public sector may take a more active leadership role in the modernizationeffort.Where changes in legislation are required, this can be an effective approach.In the past few years, supervisors and international financial institutions havedevoted more attention to governance and its importance for safety and soundness.Governance is also crucial for the quality of decisionmaking.The responsibilities, composition, and powers of the boards of directors of market institutions are particularlyimportant A broader composition of board members is one way of taking the viewsof different sectors into account in deciding about modernization plans, and in shapingand implementing them. It is likely, for example, that the presence of central bankofficials on the board of directors overseeing securities market reform, as in the caseof Mexico, leads to better results for the initiative.The composition, powers, and termsof reference for the board of directors of the CSD in Colombia are most likely onereason for the success of the modernization initiative in that country.FundingWithout adequate funding, no modernization can move ahead. In fact, both the visionand management functions are essential in order to obtain funding. Various developmentinstitutions, including the World Bank, the Inter-American Development Bank,the Banco Centroamericano de Integracion Economico, and the Corporation Andinode Fomento, might be able to provide financial support and funding for market modernization.Funding may also come from market participants, demutualization, or thesecurities processing institutions.The Final Report of the Committee of Wise Men on the Regulation of EuropeanSecurities Markets addresses issues relating to the integration of securities markets inmultiple jurisdictions. 22 The report aims at promoting efficiency, consistency, and fairnessin securities markets. Recognizing the costs of fragmentation of markets, infrastructure, and regulation, the report presents recommendations for promoting amore integrated regulatory and supervisory structure. While the details of the recommendationsmay not be directly relevant for other regions, the underlying marketcompetitive, and institutional issues are likely to be similar Thus, this report and itsrepercussions should be useful for other initiatives seeking to integrate or harmonizesecurities markets in other parts of the world.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub22 Committee of Wise Men (2001); www.europa.eu.int.