The International Organization of Securities Commissions (IOSCO) today published a list of its members who have yet to sign the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information. Established in May 2002, the MMoU is the instrument used by securities regulators around the world to combat the cross-border fraud and misconduct that can weaken global markets and undermine investor confidence.
By publishing the list, IOSCO seeks to encourage its non-signatory members to take the measures needed for them to sign the MMoU, as part of its commitment to eradicate potential safe havens for wrong doers. New signatories to the MMoU also contribute to strengthening IOSCO´s international enforcement network.
Georgina Philippou, Chair of IOSCO Committee 4 on Enforcement and the Exchange of Information and Co-chair of the MMoU Screening Group, said: “Publishing the list of non-signatories to the MMoU is an important step for IOSCO, and not one we have taken lightly. 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.”
The MMoU provides a mechanism through which securities regulators share with each other essential investigative material, such as beneficial ownership information, and securities and derivatives transaction records, including bank and brokerage information. It sets out specific requirements for the exchange of information, ensuring that no domestic banking secrecy, blocking laws or regulations prevent the provision of enforcement information among securities regulators. Publishing the list of non-signatories also is aimed at encouraging national governments and parliaments to adopt the measures that support securities commissions in their efforts to comply with the MMoU.
The 93 members who are signatories represent approximately 95% of global securities markets. Of the 30 members who are not yet signatories, 25 are on the Appendix B— the list of members who have formally expressed their commitment to seek the legislative and administrative changes necessary for achieving MMoU compliance.
The increase in the number of signatories over the last decade has led to a sharp upsurge in cross-border cooperation, enabling regulators to investigate a growing number of insider traders, fraudsters and other offenders. In 2006, a total of 520 requests for assistance were made pursuant to the MMoU; the annual figure increased to 1,600 in 2010 and to 2090 in 2011. Last year, the MMoU was used by signatories to solicit the exchange of information during the LIBOR scandal.
The majority of requests made are for information related to insider dealing, market manipulation, misrepresentation of material information and other fraudulent or manipulative practices. Cross-border cases of wrong doing that could not have been investigated ten years ago can now be investigated and brought before the relevant courts and tribunals.
To further expand this network for cross-border cooperation, IOSCO in 2010 asked all its members to become signatories by 1 January 2013. It approved a resolution in May 2012 that allows it to take tougher measures to encourage compliance by it non-signatories. The resolution called for the IOSCO Board to evaluate at its first meeting in 2013 the implementation of the MMoU by member jurisdictions and to determine what additional measures might be required to attain further compliance. These issues will be considered at the IOSCO Board meeting in Sydney on 21 – 22 March.
Jean-Francois Fortin, Co-chair of the MMoU Screening Group, said: “IOSCO will ensure that a comprehensive program of technical assistance and political support is made available to non-signatory members who require it, but we are also considering what further steps we can take to encourage those jurisdictions to raise their game.”
