Co-operative relationships allow regulators to oversee financial firms and other regulated entities that operate in multiple jurisdictions. The OSC consults and collaborates with international regulators through its active membership and participation in international organizations that work to improve the regulation of financial markets throughout the world.
These organizations include the International Organization of Securities Commissions (IOSCO), the international Joint Forum, the North American Securities Administrators Association (NASAA) and the Council of Securities Regulators of the Americas (COSRA).
OSC staff also monitor regulatory and capital market developments elsewhere in the world, share information with other regulators, and co-operate in the enforcement of securities laws across borders.
To better facilitate co-operation and information sharing, the OSC has entered into international memoranda of understanding (MOUs) with regulators in other jurisdictions. These MOUs provide a framework for the OSC to express its commitment to close co-operation, collaboration and information sharing with regulators in other countries in the interest of fulfilling our respective regulatory mandates. This includes promoting investor protection, fostering the integrity of, and maintaining confidence in, capital markets, and reducing systemic risk.
The OSC has the legal authority to share supervisory information contemplated in MOUs based on the Securities Act (Ontario). The OSC may provide information to, and receive information from, other securities or financial regulatory authorities, in Canada and elsewhere.
A key MOU is the International Organization of Securities Commissions (IOSCO) Multilateral MOU. Endorsed in 2002, it is based on the IOSCO Objectives and Principles of Securities Regulation and the experience gained by securities regulators in using bilateral MOUs. The MOU is effective in encouraging regulators to share information and provide assistance on cross-border enforcement-related matters.
Once an MOU between the OSC and another regulator has been signed, it is published in the OSC Bulletin.
International Organization of Securities Commissions (IOSCO)
Created in 1983, IOSCO is a global forum for securities regulators to co-operate in promoting high standards of regulation, and to share information and provide assistance, particularly in enforcement. IOSCO’s 193 members represent 114 countries that regulate 95% of global capital markets.
The OSC is a member of the IOSCO Technical Committee, an executive decision-making body representing the world’s larger, more sophisticated capital markets, as well as a number of IOSCO task forces and standing committees.
Over the next several years, IOSCO will continue its extensive work to reshape the global regulatory system, largely in response to the financial crisis. IOSCO task forces created in response to the market turmoil have published reports and issued recommendations relating to the reduction of systemic risk and the oversight of hedge funds, securitization markets, short-selling and derivatives, and have published a revised code of conduct for credit rating agencies.
IOSCO is working to promote consistent implementation of these recommendations in member jurisdictions. The OSC is actively participating in the follow-up work of the task forces and on standing committees that are co-ordinating implementation.
Below are some examples of the OSC’s involvement with IOSCO task forces:
- Hedge fund regulation. The OSC participated in the development of principles for hedge fund regulation and a template to gather information on systemically important hedge funds.
- Credit rating agencies. The OSC participated in the development of the IOSCO Code of Conduct for Credit Rating Agencies. In co-operation with the CSA, the OSC is developing a regulatory oversight framework for credit rating agencies in Canada that is based on the IOSCO Code.
- Oversight of market participants. The OSC is an active member of the Supervisory Cooperation Task Force, which developed principles for co-operation and information sharing relating to supervisory oversight of market participants. The OSC and the U.S. Securities and Exchange Commission have recently entered into a Supervisory Cooperation MOU based on the work of the IOSCO task force.
For more information on these reports, visit IOSCO’s Public Documents Library.
The Joint Forum was established in 1996 as a cross-sectoral sub-committee of the Basel Committee on Banking Supervision, the International Association of Insurance Supervisors and the IOSCO Technical Committee. The Joint Forum focuses on issues relating to financial conglomerates and on issues that are of common interest to the three financial sectors.
In particular, the Joint Forum is interested in identifying core regulatory principles that are common to all three sectors, identifying differences in market practices, regulation and supervisory practices across the sectors, and assessing the potential for these differences to lead to regulatory gaps, regulatory arbitrage, inefficiencies and/or excessive regulatory costs.
The OSC is an active member of the Joint Forum. At the request of the G20, the Joint Forum studied key issues involving systemic risk and regulatory gaps arising from the differentiated nature of financial regulation in the international banking, insurance and securities sectors. In January 2010, the Joint Forum published its recommendations, focusing on certain unregulated or lightly regulated entities, including hedge funds.
Over the next several years, the OSC will be involved in new work of the Joint Forum relating to future incentives in the securitization market, updating supervisory principles for financial conglomerates and following up on the recommendations of the January 2010 report.
North American Securities Administrators Association (NASAA)
NASAA is a forum for the state securities regulatory authorities in the U.S., the provincial and territorial authorities in Canada, the Mexican Comisión Nacional Bancaria y de Valores and the Puerto Rican Financial Institutions Commission to discuss issues of mutual concern and develop strategies for educating investors, educating NASAA members and law enforcement agencies, and promoting uniform securities legislation, polices, forms and exams.
NASAA also provides a forum for state securities regulators in the U.S. and Canadian securities regulators to discuss issues of mutual concern and learn from each other’s experience.
The OSC is an active member of NASAA and participates on a number of its committees and working groups.
Council of Securities Regulators of the Americas (COSRA)
The OSC is a member of COSRA, which brings together approximately 30 securities regulators from the Americas and the Caribbean. COSRA focuses on issues relating to investor protection, market integrity, regulatory co-operation and information sharing.
COSRA recently completed an examination of members’ concerns regarding self-regulation within the framework of the IOSCO Principles on Self-Regulating Organizations. COSRA is also examining the arrangements among members that facilitate mutual reliance, mutual recognition or other cross-border arrangements within the region.