The Board of the International Organization of Securities Commissions (IOSCO) today published a set of good practices related to the use of global supervisory colleges in securities markets, with the aim of increasing cooperation and information-sharing among securities regulators.
The report Lessons Learned from the Use of Global Supervisory Colleges provides a framework for securities regulators seeking to create new global supervisory colleges for sectors of financial markets where they are not currently used, which could strengthen cooperation between regulatory authorities and further assist regulators in addressing the adverse effects of market fragmentation.
The report is based on previous IOSCO work on market fragmentation and builds upon the experiences of IOSCO members with supervisory colleges for such entities as credit rating agencies and CCPs.
In its earlier reports, IOSCO identified supervisory colleges as one of the collaborative mechanisms that securities regulators could use to obtain a more complete picture of an internationally active market participant. IOSCO members participating in supervisory colleges said they gained access to higher quality information, enabling them to better identify and assess risks stemming from the operations of a supervised entity.
The 14 good practices cover matters such as general purpose, membership, governance, multilateral confidentiality arrangements and the cross-border operations of supervisory colleges. Based on member feedback, the good practices also encourage the use of supervisory colleges to share information and solutions in times of crises.
The Report calls for the use of” core-extended” structures where circumstances allow. This arrangement would allow all relevant authorities – including those from emerging jurisdictions – to participate in information exchange about a supervised entity appropriately.
Finally, the Report considers sectors of securities markets where the use of supervisory colleges could be expanded; building on (i) considerations such as interconnectedness where market participants may be doing business across multiple jurisdictions and/or conduct activities which could have spill-over effects on other jurisdictions; and (ii) new emerging areas where supervisory knowledge may not yet have been fully developed. Based on these criteria, some IOSCO members have suggested there may be merit in making use of supervisory colleges for market intermediaries, financial benchmarks administrators, crypto-asset platforms and asset management.