The Journal speaks with Cayman Islands Monetary Authority Managing Director, Cindy Scotland, to appreciate the importance of Cayman becoming a full member of IOSCO, the International Organisation of Securities Commissions.
How long has it taken for the Cayman Islands to become a full member of IOSCO and were we affiliate members prior to this full membership?
Application for ordinary membership of IOSCO was first made in 2003. This application was not advanced to the main decision making bodies of IOSCO pending changes to Cayman Islands legislation primarily CIMA‘s ability to consent to onward disclosure of information provided to foreign regulators for use by foreign criminal authorities in criminal proceedings in a requesting jurisdiction.
Between 2005 and 2007 CIMA was engaged in extensive discussions with IOSCO on international cooperation which culminated in CIMA being invited to resubmit its application for membership in December 2007.
An application was re-submitted on 7 February 2008.
What is the process for becoming a full member?
Having adopted the multilateral memorandum of understanding (IOSCO MMOU) designed to facilitate cross-border enforcement and exchange of information among the international community of securities regulators in 2002, IOSCO determined that applicants for ordinary and associate membership, with primary responsibility for securities regulation in their jurisdiction, needed to apply to become signatories to the IOSCO MMOU and must sign the MMOU as a condition for being accepted as IOSCO members.
The application must include a brief description of securities regulation along with an outline of CIMA’s regulatory functions attaching supporting documents and legislation, responses to the IOSCO MMOU application questionnaire and a signed declaration of acceptance of the By-laws and Resolutions adopted by the Presidents’ Committee of IOSCO.
The application is initially assessed by a Verification Team (the VT). Upon their recommendation the application is forwarded for vetting by a Screening Group composed of 28 member countries.
The Screening Group considers the report of the VT and poses any questions for response by the applicant country. Upon receipt of the support of the Screening Group, the application must have the approval the Chairs of the Executive Committee, the Technical Committee and the Emerging Markets committee.
Following upon approval and execution of the signature on the MMOU, the recommendation of the Executive Committee in support of the application is forwarded to the next meeting of the IOSCO President’s Committee which sits once per year.
How much effort has the Cayman Islands put into becoming a full member?
Specific provisions of laws, rules and regulations that enable CIMA to provide assistance in particular circumstances which needed to be addressed either by way of amendments to the Monetary Authority Law or review of regulatory policies were actioned by CIMA and approved by Cabinet.
Copious questions were also posed by the Screening Group between June 2008 and January 2009 to which CIMA responded by evidencing supporting legislative provisions or by reference to cases as practical examples to address concerns such as CIMA’s ability to assist in criminal investigation whether or not independent interest exists in the matter.
Why is it so important for Cayman to be a full member?
IOSCO is recognised as the international standard setter for securities markets. The Organisation’s wide membership regulates more than 90 per cent of the world’s securities markets and IOSCO is the world’s most important international cooperative forum for securities regulatory agencies. IOSCO members regulate more than one hundred jurisdictions and the Organisation’s membership is steadily growing.
IOSCO Principles and the IOSCO MMOU are considered as primary instruments to facilitate cross-border cooperation, reduce global systemic risk, protect investors and ensure fair and efficient securities markets.
Will it give us a competitive edge over others? If so, how?
There is a competitive edge over non-members particularly since there is certain recognition that is synonymous with IOSCO membership. As the benchmark for international cooperation among securities regulators, IOSCO membership opens the door to accessing a wide expanse of resources and a network of contacts as well as comprehensive technical assistance available only to its members, in particular those which regulate emerging securities markets.
Considering the increasing international activity in the securities and derivatives markets, and the corresponding need for mutual cooperation CIMA’s ability to ensure compliance with, enforcement of its regulatory laws and international standards will be greatly enhanced.
What do you anticipate will be the impact on Cayman’s financial services industry?
Some countries either do not allow investment vehicles from non IOSCO member countries to be sold in their jurisdiction or will require greatly enhanced due diligence which makes it difficult to do business with those jurisdiction. A strong validation by IOSCO of our ability and willingness to engage other regulators will remove an impediment from our financial services industry in this regard and open up these markets for Cayman-domiciled securities providers.
Are there any similar international entities that the CIMA is looking to court in a similar way?
CIMA submitted it application for accession to becoming a signatory to the Multilateral MOU of the International Association of Insurance Supervisors (the IAIS MMOU) in November of 2008.
CIMA is a member of IAIS but “although accession to the MMOU regime is not obligatory on the part of an IAIS member, closer cooperation and information exchange amongst insurance supervisors is an extremely important aspect for strengthening insurance supervisory regimes and promoting financial stability”.
Anything else you may wish to add.
In these times of unprecedented global financial upheaval, the ability of jurisdictions small and large to work together to properly identify causes and to develop responses that will bring about truly effective solutions is paramount. The Cayman Islands Monetary Authority therefore looks forward to being an integral part of IOSCO. We believe that, because of the volume and nature of the financial services that are provided in and from the Cayman Islands, we have a valuable perspective and are in a position to make a useful contribution to IOSCO’s work. CIMA pledges its willingness to work along with IOSCO as well as with other regulatory bodies to find common solutions to the challenges being faced by the international regulatory community, both on the domestic and international fronts.
Over the years CIMA management has worked persistently to bring this matter to a final conclusion for the benefit of the jurisdiction.