The world’s securities and futures regulators met in Hong Kong this week for the 31st annual conference of the International Organization of Securities Commissions. The final communiqué released at the end of the meeting reports of the progress of a number of IOSCO initiatives.

IOSCO adopted a new resolution that encourages members to examine the legal framework under which they operate and to enable the freezing of assets derived from cross-border securities and derivatives violations. It reports that the resolution was adopted in response to the growing challenge posed by the increase in cross-border fraudulent and illicit activity and proceeds of fraud that cross borders, along with the general absence of powers to freeze assets internationally.

Its Task Force on Corporate Governance will assess how different jurisdictions ensure that issuers’ boards of directors express independent judgment and how the interests of minority shareholders are protected. The Task Force is being chaired by the Comisión Nacional del Mercado de Valores of Spain and the Australian Securities & Investments Commission.

The Task Force on Non-Audit Services is analyzing a range of issues related to quality audits and auditor independence. The objective is to recommend reforms that might facilitate cross-border convergence of best practices. It is anticipated that a report on these issues will be released towards the end of 2006. This Task Force is chaired by the Australian Securities & Investments Commission.

IOSCO has also reconstituted its Task Force on Credit Rating Agencies to review the codes of conduct that have been released by credit rating agencies to determine whether CRAs consistently choose to “explain” (rather than comply) with specific provisions of the IOSCO CRA Code.

The group also reports that it is currently reviewing how firms engaged in a securities offering manage the flow of information in their possession to address any conflicts of interest. It expects to release a draft discussion paper on these issues for public consultation during the final quarter of 2006.

IOSCO is also currently carrying out work to develop guidance for regulators in emerging market economies in relation to capital adequacy requirements for financial intermediaries.

An ad hoc committee has also been formed to examine “boiler room” brokerage activity around the world. It aims to provide guidance on issues facing regulators in combating boiler room scams.

A document concerning governance for collective investment schemes has also been approved for release for consultation. It addresses the concept of independence, the powers of independent oversight bodies, and the functions to be performed by these independent oversight entities. IOSCO has also started work analyzing soft commission arrangements across different jurisdictions.

It is also looking at hedge funds, exploring how hedge funds can ensure there exist clear, concise and effective disclosure of the features of hedge funds (particularly fees, risks, experience of fund managers, internal controls, performance disclosures and conflicts of interest). In addition, IOSCO has decided that a set of principles in terms of valuation and administration may prove of value to the hedge fund industry.

Meanwhile, IOSCO held a number of elections at the conference and Michel Prada, chairman of the Autorité des marches financiers of France was re-elected as chairman of the Technical Committee, and Roel Campos, commissioner of the U.S. Securities & Exchange Commission, was re-elected as deputy chair of the Technical Committee.

Elections also took place for a new executive committee. The committee is composed of 19 ordinary members and it represents the main policy setting and decision making body of the organization.

The executive committee is now composed of Prada, M. Damodaran, chairman of the Securities & Exchange Board of India and chairman of the IOSCO Emerging Markets Committee, the chairmen of the four regional committees. Nine members were elected by the presidents’ committee, including David Wilson, chairman of the Ontario Securities Commission; and, four members elected by the regional committees. Jane Diplock, chair of the New Zealand Securities Commission, was re-elected as chairperson, and Shang Fulin, chairman of the China Securities Regulatory Commission was elected to take up the position of deputy chair. All these appointments and elected positions are for a two year term.