NEW IOSCO PRINCIPLES AND METHODOLOGYNEW IOSCO PRINCIPLES AND METHODOLOGY

Tajinder SinghDeputy Secretary General

IOSCO

IOSCO A B i f I d iIOSCO- A Brief Introduction

IOSCO is recognized as the International Standard setter IOSCO is recognized as the International Standard setter for Securities Regulation

100 + jurisdictions, more than 95% of world capital j , pmarkets;

IOSCO Principles are one of the 12 key standards and d d b S k d f lcodes recognised by FSB as key to sound financial systems

IOSCO MOU recognized as a benchmark for international cooperation and enforcementcooperation and enforcement

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IOSCO Objectives And Principles of Securities Regulation

Accepted as the international standard for securities regulation

Core Objectives Core Objectives

- Protecting investors

- Fair, efficient and transparent markets, p

- Reducing systemic risk

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38 Principles now – added 8 Principles in June 2010

IOSCO Principles Cover areas relating to: Cover areas relating to:

- Regulators

- Self regulation

- Enforcement and Cooperation

- Issuers and Information service providers

- Collective Investment Schemes

- Market Intermediaries

- Secondary Markets

A t f j i di ti i t P i i l f

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Assessment of jurisdictions against Principles- use of Methodology

Methodology

38 Principles of Securities Regulation (8 new) 38 Principles of Securities Regulation (8 new)

Provides interpretation of the Principles

Used for assessments (FSAPs, IOSCO assessments, …)( , , )

Draws upon various IOSCO reports

The new IOSCO Principles and Methodology are available at:

http://www.iosco.org/library/pubdocs/pdf/IOSCOPD359.pdf

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THE REGULATOR

[1 through 15]

Accountability & Independence

General Powers & Resources Enforcement & C ti P

p[1, 2 ,4 and 5] [1, 3, see also 6, 7 and 8] Cooperation Powers

[10 through 15]

Functions[19 through 38]

Issuers

[16 through 18]

Intermediaries CIS Secondary MarketsAuditors, CRAs & other ISP

[29 through 32] [24 through 28] [33 through 38][19 through 23]

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Revision of the Methodology

2010:

The IOSCO President’s Committee adopted a revised set of 38 Principles

IOSCO reformulated its mission statement: New goals and priorities:

maintaining and improving the international regulatory frameworkmaintaining and improving the international regulatory framework for securities markets by setting international standards;

identifying and addressing systemic risks;

strengthening our role in the international financial community instrengthening our role in the international financial community in order to advance implementation of the IOSCO Principles.

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Revision of the Methodology:

hl hHighlights

Extensive rounds of consultation with technical groups, regional committees, Emerging Markets Committees, SROCC and members at large within IOSCOat large within IOSCO.

Active involvement of IOSCO Secretariat.

High level guidance of the Executive and Technical Committees.

Association of the IMF and World Bank.

Approval of the new Methodology: September 2011.

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Revision of the Methodology:Revision of the Methodology:

Structure

For each group of principles: Preamble and Scope.

F h P i i l For each Principle: Introduction

Key Issues

Key Questions

Explanatory Notes

Benchmarks Benchmarks

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Revision of the Methodology:

h lEight new principles

Based on the lessons learned from the financial crisis and subsequent changes in the regulatory environment.

Their proper implementation is critical to the creation and maintenance of a sound global regulatory system.g g y y

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Revision of the Methodology:

h lEight new principles

Principle 6: The Regulator should have or contribute to a process to monitor, mitigate and manage systemic risk, appropriate to its mandate.

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Revision of the Methodology:

h lEight new principles

i i l h l h ld h ib Principle 7: The Regulator should have or contribute to a process to review the perimeter of regulation regularly.

Principle 8: The Regulator should seek to ensure that conflicts of interest and misalignment of incentives are avoided, eliminated, disclosed or otherwise managed.

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Revision of the Methodology:

h lEight new principles

i i l h l h ld h ib Principle 7: The Regulator should have or contribute to a process to review the perimeter of regulation regularly.

Principle 8: The Regulator should seek to ensure that conflicts of interest and misalignment of incentives are avoided, eliminated, disclosed or otherwise managed.

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Revision of the Methodology:

h lEight new principles

Principle 19: Auditors should be subject to adequate levels of i htoversight.

Principle 20: Auditors should be independent of the issuing Principle 20: Auditors should be independent of the issuing entity that they audit.

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Revision of the Methodology:

h lEight new principles

Principle 22: Credit rating agencies should be subject to adequate levels of oversight. The regulatory system should ensure that credit rating agencies whose ratings are used for regulatorycredit rating agencies whose ratings are used for regulatory purposes are subject to registration and ongoing supervision.

Principle 23: Other entities that offer investors analytical or evaluative services should be subject to oversight and regulation appropriate to the impact their activities have on the market or the degree to which the regulatory system relies on themthe degree to which the regulatory system relies on them.

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Revision of the Methodology:Revision of the Methodology:

Eight new principles

P i i l 28 R l i h ld h h d f d Principle 28: Regulation should ensure that hedge funds and/or hedge funds managers/advisers are subject to appropriate oversight.

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NEXT STEPS

ASSESSMENT COMMITTEE:

New IOSCO Committee set up in February 2012. New IOSCO Committee set up in February 2012.

A subgroup (ITF) will play the role of “Guardian of the IOSCO Principles and Methodology”and Methodology .

First Thematic Peer Review on Principles 6 and 7 to provide guidance i th i i l t ti d i t t tiin their implementation and interpretation.

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THANK YOUTHANK YOU

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