New IOSCO Measures to Strengthen Standard on Cross-border Cooperation

The International Organization of Securities Commissions (IOSCO) has approved a resolution to gradually restrict opportunities of national regulators that have not signed its Multilateral Memorandum of Understanding (MMoU) on cooperation and exchange of information.

Adopted in September, the resolution is part of four measures to encourage non-signatory members to sign the MMoU, the instrument used by securities regulators around the world to fight the cross-border financial services misconduct that can weaken global markets and undermine investor confidence.

The resolution will restrict non-signatories’ ability to influence key IOSCO decisions due to the limited support they can provide to IOSCO’s enforcement efforts. It also encourages national governments and parliaments to adopt the measures that support securities commissions in their efforts to comply with the MMoU.

IOSCO’s four measures are as follows:
1. Restricting outstanding non-signatory members from nominating candidates from their organization for election or appointment to leadership positions, effective Sept. 20.
2. All outstanding non-signatory members in leadership positions will be asked to step down, effective March 31 2014.
3. From June 30 next year, the participation of non-signatory members in IOSCO Policy Committees will be suspended.
4. From Sept. 30 2014 the voting rights of all remaining non-signatory members will be suspended.

Additionally, the resolution suggests that “members take precautions when exercising their authorization or supervisory and enforcement responsibilities in respect of entities or individuals linked to non-signatory jurisdictions.”

Twenty-eight members still need to sign the MMoU, and the list of members who have formally expressed their commitment to seek the legislative and administrative changes necessary for achieving the MMoU compliance is 23.

Some IOSCO members already have measures to that effect in place. The Hong Kong Securities and Futures Commission, for example, expects an overseas company seeking a listing on the local exchange to be incorporated in a jurisdiction where arrangements are in place to ensure reasonable regulatory cooperation.


The latest signatories, the Institut Nacional Andorrà de Finances 1 (INAF) and the State Securities Commission of Vietnam (SSC), formally signed the MMoU in September. The new signatories brought to 97 the total number of signatories to the MMoU out of a total of 125 eligible IOSCO members.

Georgina Philippou, the Co-Chair of the MMoU Screening Group, said: “By signing the MMoU, the SSC and INAF have strengthened their ability to investigate cross border market misconduct and contributed to enhancing the level of global regulation and enforcement. Our aim is that the introduction of these graduated measures will encourage more jurisdictions to become signatories as quickly as possible.”

Nine other members became signatories since IOSCO’s last annual conference in May 2012. These new MMoU signatories are:
• The Securities Commission of The Bahamas
• The Securities Commission of the Federation of Bosnia and Herzegovina
• The Superintendencia del Sistema Financiero of El Salvador
• The Central Bank of Ireland (CBI)
• The Financial and Capital Market Commission of Latvia
• The Reserve Bank of Malawi
• The Qatar Financial Markets Authority
• The Securities and Exchange Commission of Trinidad and Tobago
• The Securities and Commodities Authority of the United Arab Emirates

In 2006, a total of 520 requests for assistance were made pursuant to the MMoU; the annual figure increased to 1,624 in 2010, to 2,088 in 2011 and to 2,374 in 2012.