The International Organization of Securities Commissions’ wrapped up its annual conference in Colombo, Sri Lanka Thursday with a pledge to continue to concentrate on strengthening consultation and cooperation between regulators.

IOSCO said in a communique that its organizational priorities include maintaining its status as the international standard-setter for securities regulation by improving enforcement related cross-border cooperation and implementing the IOSCO Objectives and Principles of Securities Regulation. It has also endorsed a new IOSCO Public Consultation Policy.

“Here in Sri Lanka this week we have taken landmark decisions in adopting a new strategic direction for IOSCO which sets the path for the next few years,” Jane Diplock, chairman of the IOSCO executive committee, said in a statement. “It provides IOSCO with the opportunity to live up to its important responsibilities as the international standard setter for securities regulation.”

Part of the strategy will involve greater emphasis on the IOSCO Multilateral Memorandum Concerning Consultation and Cooperation and the Exchange of Information. Adopted in May 2002, 27 IOSCO members have signed the MOU. At the conference, IOSCO adopted a timetable by which all member regulators, which are not already signatories to the MOU, will be asked to meet this benchmark by Jan.1, 2010.

It suggests that stepped up efforts to implement the MOU and the IOSCO principles, “will deliver significant benefits as the enforcement activities of members become stronger and national markets are made more attractive to investors”.

On the enforcement front, it’s analyzing the powers available to regulators to freeze assets and repatriate them. “This work includes developing a range of approaches that can deal with issues associated with freezing assets and recovering property,” it says. Also, IOSCO reports that it’s devoting significant resources to the issue of boiler rooms and cold calling in order to address trends in securities and futures violations. A task force has been established and is currently working on options to tackle boiler room operations that have been identified.

The chairman of the Securities & Exchange Commission of Sri Lanka, Dayanath Jayasuriya, stated, “As we rapidly move towards “one global village” with increased cross-border trading, regulators need to have access to new information gateways and channels of communication with fellow regulators.”

Among other initiatives:

  • IOSCO re-confirmed its commitment to raise the standards for cross-border co-operation among securities regulators;
  • fighting to financial fraud;
  • cooperating with the Basel Committee on Banking Supervision as well as the International Association of Insurance Supervisors;
  • developing procedures to encourage cooperation and consultation among members in the regulatory interpretation and enforcement of International Financial Reporting Standards;
  • studying the regulation and oversight of auditors;
  • undertaking a project to analyze the policies of securities and derivatives exchanges in dealing with error trades;
  • studying exchange demutualization and cross-border linkages, and;
  • publishing a paper on the issues associated with the responsibilities of market intermediaries to establish a compliance function that identifies, assesses, monitors and reports on its compliance.

    IOSCO also said it is working to establish broad principles for collective investment schemes’ governance, developing international best practice standards for fighting market timing trading, undertaking a research project on hedge funds that may result in guidelines for hedge funds that would include clear disclosure principles. The IOSCO SRO Consultative Committee is developing a Model Code of Ethics intended to strengthen a culture of ethical behavior within the financial services industry.

    Public panels at this year’s conference focused on: the regulation of credit rating agencies; the importance of investor education in emerging economies; the possible need for greater regulation of analysts; and, hedge funds.

    “The challenges facing the developing markets should not be underestimated but the atmosphere of international collaboration within the IOSCO structures through investor education programs and training seminars is delivering positive results for the emerging markets,” said the chairman of the IOSCO Emerging Markets Committee, Dogan Cansizlar.

    Finally, the Montreal Exchange and Market Regulation Services Inc. were admitted as new affiliate members.

    The next IOSCO annual conference will be held in Hong Kong June 5-8, 2006.