SC adopts IOSCO methodology to assess alignment of domestic regulations with international principles

The Securities Commission of Malaysia (SC), together with regulators of some 100 jurisdictions across the world, has adopted the International Organisation of Securities Commissions (IOSCO) methodology of assessing domestic securities markets regulations vis-à-vis internationally-adopted principles.

The SC which continually strives to ensure that the Malaysian capital market meets with international benchmarks to ensure highest standards and widest acceptance, was actively involved in developing the document, officially called “Methodology for Assessing Implementation of IOSCO Objectives and Principles of Securities Regulation”.

The document was released at the IOSCO 2003 Annual Conference in Seoul held in mid-October (14-17 October) and adopted by its members at the end of the conference. This document is available on the IOSCO website,

IOSCO is the main standards setter for the regulation of capital markets. Based in Madrid, it is the primary forum for international cooperation among securities regulators. It has 168 members from more than 100 jurisdictions. The SC is an active participant and decision maker in IOSCO, as a member of its Executive Committee. It also heads the Asia Pacific Regional Committee, the Emerging Markets Committee Working Group on the Regulation on Secondary Market and the Islamic Capital Market Task Force.

SC Chairman Datuk Ali Abdul Kadir said that the document was important in facilitating assessment of the regulatory standards used in each jurisdiction.

“IOSCO, as an international standard setting body representing both developed and emerging economies, has developed principles and objectives governing all matters related to securities regulation and supplemented this with the methodology of assessing how well we are abiding by these principles and objectives,” he said.

“The methodology will assist jurisdictions in identifying areas where their securities regulations do not meet the international standards set out in the IOSCO Principles, in categorising any failures in implementation by degree of severity, in identifying areas for priority action, and in developing action plans to seek any necessary reforms,” he said.

“Going forward, IOSCO is also implementing a training programme to assist and encourage jurisdictions to adopt international regulatory standards. The SC will continue to put our priority here as we feel it is integral to a sound international capital market framework.”

Datuk Ali said that Malaysia as party to the drafting to of the methodology had brought up issues and concerns of the emerging markets and ensured that it was applicable to emerging markets.

“The SC feels international standards must take into account issues and concerns faced by emerging markets, and as such, has taken on this role in its participation in the development of the principles and the methodology,” he said.

At the Seoul Annual Conference, the SC also signed memoranda of understanding (MOU) with three counterparts, the Securities Commission of the Federation of Bosnia & Herzegovina, Commissione Nazionale per le Societa e a Borsa of Italy and the Capital Market Authority of the Sultanate of Oman. The MOUs are aimed at facilitating inter-jurisdiction cooperation on the enforcement of securities laws. This brings the number of MOUs signed by the SC with its foreign counterparts to 19.

“Maintaining the integrity of capital markets requires securities regulators working together to prevent the use of international capital markets for money laundering, terrorist financing, and other forms of international financial crime,” said Datuk Ali.

He said stringent international regulatory standards and efficient cooperation and information sharing mechanisms are essential tools to meet those key objectives internationally.

30 October 2003