IOSCO seeks solutions to cross-border regulatory problems

The International Organisation of Securities Exchange has stepped up efforts to address the challenges of cross-border regulation in securities markets.

In line with the efforts, the organisation has published a report on cross-border regulation, which provides detailed resource for regulators.

The final report of the IOSCO Task Force on Cross-Border Regulation includes a toolkit of three broad types of cross-border regulatory options, supporting case studies, a description of the processes used to assess comparability of foreign regulatory regimes, and considerations on the application of the toolkit.

“These better equip regulators and policy-makers to develop, implement, and evaluate cross-border regulatory approaches,” IOSCO said in a statement.

According to the report, cross-border regulatory challenges generally may arise from different philosophies and approaches to international engagement in balancing market access objectives and the desirability of lowering regulatory burdens in the global financial system, while also protecting investors, maintaining market quality, and reducing systemic risk.

It may also arise from different financial market characteristics and stages of development as well as reservations on the part of regulators to outsource regulation to a foreign jurisdiction where, if there were subsequent regulatory failure by the foreign regulator, this could negatively impact the domestic jurisdiction

IOSCO had in June 2013, established the task force to assist policy-makers and regulators in addressing these challenges and to consider in detail cross-border regulatory issues.

“The final report indicates that cross-border regulation is moving towards more engagement via different forms of recognition to solve regulatory overlaps, gaps, and inconsistencies,” it said.

“While the increased engagement is mostly bilateral at this stage, multilateral engagement is likely to develop further as markets continue to grow and emerge around the world and with the greater use of supervisory Memoranda of Understandings.”

It added that the report presented a series of concrete next steps aimed at supporting cross-border regulation and embedding the consideration of cross-border issues more effectively into the organisation´s work.

Among these, IOSCO Policy Committees will start to identify and consider specific cross-border implications of their policy-making.

For example, the report said there was a need for consideration of how regulatory timing will work among jurisdictions and whether there should be more multilateral cooperation prior to the domestic policy-making stage.

IOSCO explained that the report’s analysis and findings were based on a survey across the IOSCO membership regarding their regulatory approaches to cross-border financial activities involving, among others, market intermediaries, securities exchanges and markets, collective investment schemes, and financial market infrastructures.

“Emphasis was placed on the underlying rationale, experiences, and challenges of developing and implementing these approaches,” it added.

The Task Force also conducted three roundtable meetings in Hong Kong, London, and Washington D.C., as well as a public consultation, to gather views from the industry and other stakeholders.

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Source : Punch

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