Governments, regulators and banks around the world have accepted the need for tighter regulations.

“We will see where the inter-national standard-setters go because it will be foolish for us to go down a particular track if what comes out of the Inter-national Organisation of Securities Commissions [Iosco] or the Basel Committee on Banking Supervision could be markedly different,” says Ian Johnston, managing director of policy and legal services at the Dubai Financial Services Regulatory Authority (DFSA).

“We would expect to see changes to capital requirements, how ratings work and risk management within companies, and what is required of risk managers.”

The DFSA will base its new capital markets regulations on Iosco standards and its new banking regulations on Basel, says Johnston, warning that unless care is taken, new rules could become too onerous for businesses.

“The challenge will be making sure we have an appropriate balance between the requirements that need to be toughened and over-regulation,” he says. “The normal response has been to swing the pendulum too far.”

The DFSA began an interim review of its rules in July. Johnston says the review had been planned for some time and was not a reaction to the current market conditions.