BOOK ONE: 2007 - GLOBALIZATION

Chapter One: Economic Globalization

XIII. International Financial Organizations

There are a number of international organizations bringing global coherence to the financial services sector. See Appendix One for a fuller list, but some sample organizations are as follows:

The International Securities Services Association

The ISSA was formed in 1979 in order to create an organization able to collect and disseminate information on the developments in the rapidly changing international securities markets, and on the other hand to offer securities operations professionals a forum to exchange ideas and issues of common interest.

As early as 1988 ISSA published the ISSA 4 recommendations that helped pave the way for many of the G30 recommendations of 1989. ISSA also monitored the progress on the G30 recommendations over the years, and finally issued its own fully revised ISSA Recommendations 2000.

In 2004 The Group of Thirty (G30) mandated ISSA to monitor 5 of the recommendations in its January 2003 report "Global Clearing and Settlement: A Plan of Action."

The International Swaps and Derivatives Association

ISDA, which represents participants in the privately negotiated derivatives industry, is the largest global financial trade association, by number of member firms. ISDA was chartered in 1985, and today has over 750 member institutions from 52 countries on six continents. These members include most of the world's major institutions that deal in privately negotiated derivatives, as well as many of the businesses, governmental entities and other end users that rely on over-the-counter derivatives to manage efficiently the financial market risks inherent in their core economic activities.

ISDA's 2005 Novation Protocol offers parties to its various Master Agreements an efficient means to agree to a uniform process by which consents to transfer of interests in Credit Derivative Transactions and Interest Rate Transactions (Covered Transactions as defined in the Protocol) may be obtained.

The Financial Markets Association (ACI)

ACI was founded in France in 1955 following an agreement between foreign exchange dealers in Paris and London. In the years that followed, other national associations were formed and there are now affiliated financial markets associations in 65 countries and individual members in another 17 countries. ACI has the largest membership of any of the international associations in the wholesale financial markets. The Head Office is based in Paris. In 1975 the first ACI Code of Conduct covering foreign exchange and euro-currency dealing was published.

The scope of The Model Code is wide-ranging, encompassing the over-the-counter markets and instruments traded by international bank treasury departments. The official language of The Model Code is English.

Where the counterparties of a transaction are unable to resolve a dispute, the ACI Committee for Professionalism provides an Expert Determination Service in order to facilitate its resolution. Market participants are encouraged to avail themselves of this service in accordance with ACI Rules for Over-the-Counter Financial Instruments Disputes Resolution.

Summary

This Chapter has shown that in all but a few, minor respects, there is a comprehensive and largely benign trend towards regulation and supervision of economic activity at a global level. Even if some regulation is delivered through national laws or national branches of international organizations, the nation has in most cases little or no remaining power to influence the content of the regulation. Judicial fora involved in the enforcement of economic regulation and in dispute resolution are lagging a little behind rule-making and supervision, but are equally sure to take on global dimensions in the end.

It is also clear that the move away from 'managed' markets to open ones, which is a marked feature of economic globalization, much enhances access to economic activity on the part of individuals, whether alone or in groups, particularly with the assistance of the Internet.

Economics, perhaps because of the international nature of modern business, has seen more globalization than some other sectors of society. The two succeeding chapters will show however that cultural and political globalization is equally ongoing and eventually inevitable.