REMARKS BY CHAIRMAN ARTHUR LEVITT
        UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                 INTERNATIONAL ORGANIZATION OF 
                     SECURITIES COMMISSIONS
                    MONTREAL, QUEBEC, CANADA
                       SEPTEMBER 18, 1996



I'm pleased to be here today.  As the single organization that
brings together securities regulators from around the world,
IOSCO offers a unique forum for us to share insights and
strategies and work to improve the quality of each of our
markets.  

There has never been a greater need for us to work together. We
regulate one of the most innovative industries on the face of the
earth, whose main commodity -- capital -- has little regard for
national borders.  If anything, the pace of change has become
even more pronounced in recent years, bringing a host of
challenges for all of us.     

As regulators of such dynamic markets, we too must be creative
and fast-moving.  We must come up with new approaches for
addressing the challenges presented by our markets.  Let me take
this opportunity to talk to you about three very basic steps that
I believe we should be taking to respond to this unprecedented
rate of change:

*    First, we must work with industry to be sure that our
     regulation facilitates market innovation while it protects
     investors.     

We regulate a dynamic and creative industry, in which new
products and trading mechanisms are developed overnight.  We need
to work with the industry to address changes as they evolve,
rather than merely responding after they have happened.  By
working with industry as it innovates and incorporates new
technology, we can gain the information we need for effective
oversight.  

In recent years, for example, we've seen the development of
financial institutions that conduct trading activities in many
markets using unregulated affiliates.  In 1994, we formed the
Derivatives Policy Group specifically to address the issues
raised by the OTC derivatives activities of unregulated
affiliates of SEC-registered broker-dealers.  

The DPG is a voluntary oversight framework under which the six
largest U.S. securities firms provide the SEC with meaningful
information regarding their risk profiles and quality of internal
controls.  The result is a flexible, yet effective, approach to
the oversight of derivatives activities and firms -- a model of
what can be achieved by working with the industry we regulate.


*    The second of this three-step approach to change is to
     constantly reappraise our regulation and discard what
     doesn't work, either because the burden outweighs the
     benefits or because it has become outdated and no longer
     meets our needs and the needs of our investors. 

The purpose of regulation is first and foremost to protect
investors.  But we do those investors a disservice if our rules
shackle industry and prevent innovation, or lead to
incomprehensible results.  It is our duty to keep our regulatory
structures as simple, clear, and up-to-date as possible.  

Our markets are changing.  But we must take care not to answer
every innovation with a new regulation.  As regulators, we should
encourage legitimate changes and improvements, not stifle them. 
All of us -- and perhaps especially those of us with more
developed and closely regulated markets -- should look at what we
have wrought and ask ourselves, "Does it work?  Is it the best we
can do today?"      

*    The final step of this three-part approach to change is to
     redouble our efforts to work together internationally to
     meet the growing demands of today's markets.   

It may have been possible, in the distant past, for securities
regulators to do their jobs alone.  Not only is it no longer
possible today -- it will never be possible again.  We must work
together, for the better our relations as regulators, the better
we can cope with changes in our markets while still protecting
investors throughout the world.  

In past years we have worked together bilaterally and
multilaterally to improve our enforcement cooperation.  Indeed,
we are all aware of how much IOSCO itself has done to promote
mutual assistance on enforcement matters.  With today's
challenges of new products, new techniques and new technologies,
we must expand our cooperation to cover regulatory issues beyond
enforcement.  

This new cooperative approach may involve nothing more than
identifying a shared concern and working with one another to
fashion a solution.  Whether it is coordinating the inspection of
an investment adviser doing cross-border business, working
together to oversee stocks listed in two markets, or building
communication mechanisms to deal with market emergencies, in
these and many other ways, better relations among regulators
means better protection for investors. 

My fellow regulators: Technology and globalization are bringing
our markets together; through IOSCO, we regulators can also come
together and reap the benefits of our colleagues' ideas and
experiences.  

We recognize that in many respects, each of our markets is
different, and each of our regulatory systems is different.  But
at the same time, we know that our goals are all the same:
building markets that will finance economic growth and
development, and maintaining the highest standards of investor
protection.

I look forward to continuing to work together, so that we may
learn from the lessons of yesterday, respond to the needs of
today, and prepare for the challenges of tomorrow.  

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