In an effort to bolster cross-border enforcement, global securities regulators have published a list of its members who haven’t signed to its agreement to share information with their fellow regulators.
The International Organization of Securities Commissions (IOSCO) published a list of its members who have yet to sign its multilateral memorandum of understanding (MMoU) that was developed in May 2002, and is now used by securities regulators around the world to combat the cross-border fraud and misconduct.
The MMoU provides a mechanism through which securities regulators can share essential investigative material, such as securities and derivatives transaction records. It sets out specific requirements for the exchange of information and ensures that there are no conflicting laws or regulations (such as domestic banking secrecy laws) to prevent the sharing of enforcement information among regulators.
The list of regulators that haven’t signed on includes supervisors in Argentina, Indonesia and Russia, among a number of African, central American and Asian countries. By publishing the list, IOSCO aims to push those who haven’t signed on to take the necessary measures that would enable them to sign, as part of its commitment to eradicate potential safe havens for securities scofflaws.
“Publishing the list of non-signatories to the MMoU is an important step for IOSCO, and not one we have taken lightly,” said Georgina Philippou, chair of IOSCO committee on enforcement and the exchange of information and co-chair of the MMoU screening group. “The MMoU is an essential tool in the fight against cross border market misconduct and IOSCO wants all its members to reach the high standards of enforcement and international cooperation required to sign the MMoU so that those who commit market misconduct have nowhere to hide.”
IOSCO says there are currently 93 signatories, representing approximately 95% of global securities markets. Of the 30 members who are not yet signatories, 25 have formally expressed their commitment to seek the legislative and administrative changes necessary for achieving MMoU compliance.
The group says that the increase in the number of signatories over the last decade has led to a sharp upsurge in cross-border cooperation. In 2006, a total of 520 requests for assistance were made pursuant to the MMoU; this increased to 1,600 in 2010 and to 2090 in 2011.
The majority of requests made are for information related to insider dealing, market manipulation, misrepresentation of material information and other fraudulent or manipulative practices. As a result, IOSCO says that cross-border cases of wrongdoing that could not have been investigated 10 years ago can now be investigated and prosecuted.
In 2010, IOSCO asked all its members to become signatories by January 1, 2013. It approved a resolution in May 2012 that allows it to take tougher measures to encourage compliance by it non-signatories, and the IOSCO board will evaluate the implementation of the MMoU, and determine what additional measures might be required, at its first board meeting of the year, scheduled for Sydney on March 21-22.