IOSCO Strategic Review
2010-2015
By Jane Diplock, Chairman, Executive
Committee and Greg Tanzer, Secretary
General
October 2009
Agenda
1.
2.
3.
4.
5.
6.
Background
Strategy 2010-2015
Overarching Strategy
Block 1: Building Research Capacity
Block 2: Expanding MMOU Efforts
Block 3: Intensifying Implementation
Assessments
7. Next Steps and Timetable
1. Background
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Aim of the Strategic Review 2010-2015
Why a strategic review?
Strategy fits IOSCO mission
Key points from 2005-2010 strategy
Outcome of the strategy 2005-2010
1. Background: aim of Strategic
Review
• Establishes IOSCO´s priorities for next 5 years
• Establishes the framework for IOSCO´s actions
• Provides IOSCO with the resources needed to
implement the plan
• Requests members to support the initiative,
since its success will depend upon individual
actions
1. Background: why a strategic
review?
• Objective: improve the effectiveness and the
efficiency of the Organization
• Reasoning: it will enable IOSCO to
– plan
– coordinate actions
– focus common efforts
• Specific circumstances: review more than ever
needed due to financial crisis and world wide
developing of global securities markets
1. Background: strategy fits IOSCO
mission
IOSCO´s By-Laws, Sections 1.1 & 1.2
1.1 Securities commissions are joined together in
IOSCO to better carry out their respective missions
through the forum of cooperation & discussion
provided by the Organization
1.2 In particular, the objective of the organization is to
enable members to exchange information with a
view to
(a) Developing securities markets & improving their efficiency
(b) Coordinating the enforcement of securities regulation &
(c) Implementing common standards
1. Background: key points from
2005-2010 strategy
1. Maintaining the role of IOSCO as the
international standard setter for securities
regulations
2. Improving enforcement related cross-border
cooperation
3. Implementing the IOSCO objectives and
principles of securities regulation
4. Continuing to raise the international profile
of IOSCO and the level of internal
communication
1. Background: outcome of the
strategy 2005-2010
1. IOSCO improved its reputation as the global
standards setter in the securities markets by:
a. Creating new standards
b. Quick and important work on the crisis
c. Updating Principles and Methodology
2. Enforcement and information exchange success:
IOSCO´s MMOU is the new global standard of
cooperation
3. Assessments of Implementation of Principles by
IOSCO and by IMF and World Bank FSAP Program
4. Reputation of IOSCO has risen considerably; internal
communication has intensified
2. Strategy 2010-2015
2 steps approach:
1. Substance
2. Form
2. Strategy 2010-2015
Step 1: Substance (finished mid 2010)
Overarching Strategy 2010-2015
Research Capacity
MMOU
Assessments and
Implementation of
Principles
Other t.b.d.
2. Strategy 2010-2015
Step 2: Form (post mid-2010)
FUNDING
STRUCTURE OF THE ORGANIZATION
3. Overarching Strategy
Lessons from the Global Financial Crisis:
1. While the crisis commenced in unregulated segments of the market and
became a credit (rather than market) crisis, the key elements of risk were
transmitted through markets which IOSCO members regulate or exempt
from regulation.
2. While much has been written on the lessons from the crisis for industry,
regulators and governments, there are a few key themes which have
consistently surfaced in the literature, most notably in the G20
declarations:
– The need for attention to be given to implementation of global standards;
– The need for regulators to look for emerging systemic risks and take actions to
mitigate them; and
– The need for improved communication and cooperation globally between
regulators.
3. Overarching Strategy:
reformed mission
The suggested reformed mission aims would be that IOSCO’s
members are committed:
• to cooperate together to develop, and promote adherence to
and implementation of, internationally recognized standards
of regulation in order to maintain orderly, efficient and fair
markets, to reduce systemic risk and to protect investors;
• to exchange information on their respective experiences in
order to assist the development of domestic markets and
their appropriate regulation; and
• to promote investor confidence in the integrity of capital
markets through effective cooperation in enforcement actions
against misconduct in those markets.
3. Overarching Strategy:
strategic goals (1)
1. Maintain the international regulatory consensus for
securities markets via the setting of international
standards, especially through:
o Building members´ regulatory capacity through the systematic
implementation of the IOSCO Objectives and Principles of Securities
Regulation throughout its membership and its training and education
program;
o Building the enforcement and surveillance framework, through full
implementation of the IOSCO MOU, possible enhancements to it, and
working with uncooperative and/or under regulated jurisdictions; and
o Development of international standards, through the systematic and
periodic review of the IOSCO Objectives and Principles of Securities
Regulation, and developing standards to deal with emerging risks and
inadequate functioning of markets.
3. Overarching Strategy:
strategic goals (2)
2. Identify and address systemic risks to the fair and
efficient functioning of markets, especially through:
o Building an independent research capacity to identify risks to the fair and
efficient functioning of markets;
o Developing implementable actions, within members’ responsibility, to
help mitigate these risks;
o Liaising with other international financial standard setters and other global
bodies having a mission complementary to that of IOSCO;
3. Overarching Strategy:
strategic goals (3)
3. Strengthen IOSCO´s role within the international
financial community in order to advance the
implementation of high-level objectives and
principles of securities regulation, especially through:
o Representation of IOSCO in relevant decision making forums;
o Strengthening communications with stakeholders, in particular the other
international financial standard setters and with bodies representing the
industry;
o Improving interaction within the IOSCO membership; and
o Establishing the accountability of relevant international standard setters to
securities regulators.
4. Block 1: Building Research Capacity
Types of research
1. Risk assessment
– Global Securities Regulation Risk Outlook
– Exploratory Analysis
2. Fundamental economic analysis on the functioning
of markets
–
Fundamental economic research
3. Project management support
– Impact assessments
– Ad hoc analyses, calculations and data analyses
4. Block 1: Building Research
Capacity
Options for research and economic analysis
Building a network:
1.
2.
3.
Highly experienced and pro-active researchers of IOSCO members
External specialists
A small research staff at the General Secretariat
What is needed:
• A small dedicated staff at the General Secretariat
• Commitment of the IOSCO members’ experienced researchers
• Commitment of a sponsor with a high reputation
4. Block 1: Building Research
Capacity
Other options that are considered by the Task
Force:
• Outsource model
• Bigger research department at the General
Secretariat
5. Block 2: Expanding MMOU Efforts
Expected Status of MMOU at 1-1-2010: almost
all jurisdictions to App. A or B
Some work left:
1. 5 non-applicants: continued effort to obtain
applications
2. Jurisdictions B  A: plan
3. MMOU update
6. Block 3: Intensifying
Implementation Assessments
• 2005 Presidents´ Committee decision: give
priority to Implementation of Principles
• Great demand by IOSCO members and G20
• Served by IOSCO or FSAPs (IMF, WB) or a joint
IOSCO-IMF effort
• How much? 40 in 5 years is reasonable.
• Who first? Both Emerging market members
and G20.
7. Next Steps and Timetable
SUBSTANCE
• Presentation of progress at Regional C’ttee, TC
and EMC meetings on overarching paper and
options papers (QIV´09)
• Input from IOSCO membership (QIV´09)
• Proposals to Presidents´ Committee (June ´10)
FORM
• Second half of 2010