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Sebi ahead of curve in checking cross-border misconduct: IOSCO

Last Updated: Thursday, September 19, 2013 - 15:47

London: Indian capital market watchdog Sebi has been appreciated by global regulators' body IOSCO for early implementation of effective measures to curb misconduct in cross-border financial services activities.

International Organisation of Securities Commissions (IOSCO), a grouping of capital market watchdogs regulating over 95 percent of the world's securities market, has passed a resolution asking its members to put in place proper checks for cross-border misconduct in their respective jurisdictions.

While passing the resolution at its five-day annual conference ending today at Luxembourg, IOSCO said the Securities and Exchange Board of India (Sebi) and Hong Kong's regulator have already adopted strong measures in this regard.

IOSCO is also adopting measures to encourage non-signatory members to sign its Multilateral Memorandum of Understanding (MMoU) on co-operation and information exchange.

This mechanism is being used by securities regulators to fight the cross-border financial services misconduct that can weaken global markets and undermine investor confidence.

The new resolution will require members to take extra precautions when exercising their authorisation or supervisory and enforcement responsibilities in respect of entities or individuals linked to non-signatory jurisdictions.

Noting that some members have already taken measures in this regard, IOSCO said: "India requires foreign investors in Indian mutual funds and equity shares to fulfil criteria, including being resident in a country that is a signatory to IOSCO's MMoU or a signatory of a bilateral MoU with Sebi".

About Hong Kong, IOSCO said the country 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.

As long as a jurisdiction remains outside international enforcement regime of the MMoU, they offer potential safe havens for wrong doers and create gaps in the grouping's global enforcement network, IOSCO said.

MMoU also sets out specific requirements for the exchange of information, ensuring that no domestic banking secrecy, blocking laws or regulations prevent the provision for sharing enforcement information among signatory securities regulators.

IOSCO said the MMoU has led to better cross-border cooperation among its members, helping them investigate an increasing number of insider traders, fraudsters and other offenders.

In 2006, 520 requests for assistance were made pursuant to the MMoU, while this figure rose to 1,624 in 2010, 2,088 in 2011 and to 2,374 in 2012.

So far, 97 regulators have signed this MMoU, whereas the total number of eligible IOSCO members stands at 125.


First Published: Thursday, September 19, 2013 - 14:38
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