1. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 1 International Financial Regulation Week 13-Lecture 9 (04.06.10) BSc (Hons) Banking and Int. Finance (BBIF08FT) Regulation and Supervision of Financial Services (ACCF 2307)

2. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 2 Contents  International Organisation of Securities Commissions  International Association of Insurance Supervisors  Basel Committee of Banking Supervisors  The Joint Forum

3. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 3 International Organization of Securities Commissions (1/2) The International Organization of Securities Commissions (IOSCO) is an association of organisations that regulate the world’s securities and futures markets. Members are typically the Securities Commission or the main financial regulator from each country. IOSCO has members from over 100 different countries, who regulate more than 90 percent of the world's securities markets.

4. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 4 International Organization of Securities Commissions (2/2) The organisations role is to assist its members to promote high standards of regulation and act as a forum for national regulators to cooperate with each other and other international organisations. IOSCO is structured into a number of committees that meet several times per year at different locations around the world and it has a permanent secretariat based in Madrid

5. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 5 History of IOSCO (1/2) IOSCO was born in 1983 from the transformation of its ancestor the ‘inter-American regional association’ (created in 1974) into a truly international cooperative body. This decision to expand the organisation beyond the Americas was made at the annual gathered in Ecuador in April 1983. The securities regulators from France, Indonesia, Korea and the United Kingdom were the first agencies to join the membership from outside the Americas. In 1998, IOSCO started work on a number of important policies that led to broader set of guidelines.

6. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 6 History of IOSCO (2/2) However it was the September 11, 2001 attacks as well as a series of large global financial scandals that started with Enron and including WorldCom, Parmalat and Vivendi that brought urgency to this work and heralded IOSCOs evolution from an international “talk shop”, where little of substance was accomplished, to a serious international organization with a real impact on the securities regulation. At the May 1999 annual conference, held in Lisbon, it was decided to have a permanent headquarter for the administrative General Secretariat and that it should be based in Madrid. In 2002 IOSCO adopted a multilateral memorandum of understanding (IOSCO MOU) designed to facilitate cross-border enforcement and exchange of information among the international community of securities regulators.

7. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 7 Objectives of IOSCO IOSCO’s main objectives are to assist its members to: Cooperate together to promote high standards of regulation in order to maintain just, efficient and sound markets. Exchange information on their respective experiences in order to promote the development of domestic markets. Unite their efforts to establish standards and an effective surveillance of international securities transactions. Provide mutual assistance to promote the integrity of the markets by a rigorous application of the standards and by effective enforcement against offenses

8. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 8 IOSCO’s Committees (1/2)  A Presidents’ Committee, composed of the Presidents, Chairmen or senior-most representatives of all securities commissions belonging to IOSCO. It is in effect the organization’s general assembly;  An Executive Committee, which comprises 19 ordinary members acting under the authority of the Presidents’ Committee, and that acts as the organization’s executive decision-making body;  A Technical Committee, with 15 ordinary and associate members drawn primarily from the larger, more developed and more internationalized economies, whose role is to develop practical responses to major regulatory issues and study possible international standards and best practices for securities market regulation; and,  An Emerging Markets Committee, with 80 ordinary and associate members (plus one non-voting member, the U.S. SEC) from Latin America, Europe, Africa, the Middle East and Asia, whose role is to conduct studies on those markets and suggest ways these markets can be improved.

9. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 9 IOSCO’s Committees (2/2)  An Emerging Markets Committee, with 80 ordinary and associate members (plus one non-voting member, the U.S. SEC) from Latin America, Europe, Africa, the Middle East and Asia, whose role is to conduct studies on those markets and suggest ways these markets can be improved.  In addition, IOSCO has four Regional Committees (Europe, Inter-America, Asia-Pacific and Africa-Middle East) with members drawn from these regions, and an SRO Consultative Committee made up of stock exchanges and financial associations who offer input to the other IOSCO committees on issues of concern to the financial industry.

10. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 10 Cooperation with other Organisations IOSCO is a member of, participates as an observer in, or coordinates with a number of other organizations. One of the most important relationships is with the Joint Forum of international financial regulators. IOSCO is one of the three organisations together with its sister organizations, the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors that make up the forum. The IOSCO MOUs are considered the primary instruments to facilitate cross-border cooperation, reduce global systemic risk, protect investors and ensure fair and efficient securities markets. IOSCO also adopted a comprehensive consultation policy designed to facilitate its continuous interaction with the international financial community and in particular with the industry.

11. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 11 International Association of Insurance Supervisors  The International Association of Insurance Supervisors (IAIS) is an international organisation that brings together the world's insurance supervisors and regulators. The IAIS is based in Basel within the premises of the Bank for International Settlements (BIS) which hosts the IAIS Secretariat. It, along with its sister organizations, the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO), together make up the Joint Forum of international financial regulators.

12. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 12 History of IAIS  Established in 1994, the IAIS represents insurance regulators and supervisors of some 190 jurisdictions in nearly 140 countries, constituting 97% of the world's insurance premiums.  It also has more than 120 observers.

13. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 13 Objectives of IAIS Cooperate to contribute to improved supervision of the insurance industry on a domestic as well as on an international level in order to maintain efficient, fair, safe and stable insurance markets for the benefit and protection of policyholders. Promote the development of well-regulated insurance markets. Contribute to global financial stability.

14. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 14 IAIS’s Principles The IAIS sets out various Principles that are fundamental to effective insurance supervision. Those Principles identify areas in which the insurance supervisor should have authority or control and that form the basis on which standards are developed. These are: 1. Insurance Core Principles and Methodology. 2. Principles applicable to the supervision of international insurers and insurance groups and their cross-border business operations. 3. Principles for conduct of insurance business. 4. Principles on the supervision of insurance activities on the Internet. 5. Principles on capital adequacy & solvency. 6. Principles on minimum requirements for supervision of reinsurers. 7. Principles No. 3.4 on Group-Wide Supervision

15. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 15 Basel Committee on Banking Supervision (1/2) The Basel Committee on Banking Supervision (BCBS) provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable.

16. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 16 Basel Committee on Banking Supervision (2/2) In this regard, the Committee is best known for its international standards on capital adequacy and the 25 Core Principles for Effective Banking Supervision. The Committee encourages contacts and cooperation among its members and other banking supervisory authorities. It circulates to supervisors throughout the world both published and unpublished papers providing guidance on banking supervisory matters. The Committee's Secretariat is located at the Bank for International Settlements in Basel, Switzerland, and is staffed mainly by professional supervisors on temporary secondment from member institutions. In addition to undertaking the secretarial work for the Committee and its many expert sub-committees, it stands ready to give advice to supervisory authorities in all countries.

17. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 17 The Joint Forum (1/2)  The Joint Forum (previously known as The Joint Forum on Financial Conglomerates) is an international group bringing together financial regulatory representatives from banking, insurance and securities.  It works under the international bodies for these sectors, the Basel Committee on Banking Supervision (BCBS), the International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS).  The group develops guidance, principles and identifies best practices that are of common interest to all three sectors.

18. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 18 The Joint Forum (2/2)  The Joint Forum was established in 1996, from a suggestion of the Basel Committee on Banking Supervision to take forward the work of the Tripartite Group whose report was released in July 1995.  The Joint Forum can trace its origins from the Tripartite Group which was formed in early 1993 to address a range of issues relating to the supervision of financial conglomerates.  The Tripartite group was composed of bank, securities and insurance supervisors and looked at issues related to the supervision of large financial conglomerates.

19. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 19 Structure and Membership of Joint Forum The Joint Forum is a group of technical experts and is composed of an equal number of senior bank, insurance and securities supervisors. Thirteen countries are represented in the Joint Forum: Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan, Netherlands, Spain, Switzerland, United Kingdom and United States. The EU Commission attends in an observer capacity. The Chairmanship of the Joint Forum rotates between the three sector committees and is named for a two-year term. A number of countries have integrated financial regulatory authorities where one organisation cover all financial regulation, including banking, insurance and securities. In these cases this national agency is typically a member of all three international organisations and a combined Joint Forum is a natural fit with the way they operate at a national level.

20. 04.06.2010 ACCF 2307-Week 13-International Financial Regulation 20 Thank You