Mediaboss Marketing

26 March 2012

The United States Securities and Exchange Commission (SEC) has announced that it has established two memoranda of understanding (MOUs) with the Cayman Islands Monetary Authority and the European Securities and Markets Authority (ESMA), as part of its long-term strategy to improve the oversight of regulated entities that operate across national borders.

SECs supervisory cooperation arrangements are said to enhance its ability to share information about regulated entities, such as investment advisers, investment fund managers, broker-dealers and credit rating agencies.

Supervisory cooperation arrangements help the SEC build closer relationships with its counterparts to cooperate and consult on each others oversight activities in ways that may help prevent fraud in the long term or lessen the chances of future financial crises, said Ethiopis Tafara, Director of the SECs Office of International Affairs.

The SECs supervisory cooperation arrangements generally establish mechanisms for continuous and on-going consultation, cooperation and the exchange of supervisory information related to the oversight of globally active firms and markets. They enhance its ability to share information about regulated entities, such as investment advisers, investment fund managers, broker-dealers and credit rating agencies.

Such information may include routine supervisory information as well as the types of information regulators need to monitor risk concentrations, identify emerging systemic risks, and better understand a globally-active regulated entitys compliance culture. The MOUs also facilitate the ability of the SEC and its counterparts to conduct on-site examinations of registered entities located abroad.

The SEC entered into its first supervisory cooperation MOU in March 2006 with the United Kingdoms Financial Services Authority, but, following the recent financial crisis, the SEC has expanded its emphasis on this form of continuous supervisory cooperation in an effort to better identify emerging risks to US capital markets and the international financial system.

As part of this effort, the SEC has co-chaired an international task force in 2010 to develop principles for cross-border supervisory cooperation. These principles have since proven to be a useful guideline for structuring MOUs around the type of information to be shared, the mechanisms which regulators can use to share information, and the degree of confidentiality this information should be accorded.

The two MOUs reached this month follow on a similar supervisory arrangement that the SEC concluded with the Quebec Autorit des marchs financiers and the Ontario Securities Commission in 2010, and expanded to include the Alberta Securities Commission and the British Columbia Securities Commission last September.

The SEC attaches particular importance to the Cayman Islands as a major offshore financial centre and home to large numbers of hedge funds, investment advisers and investment managers that frequently access the US market, while ESMA fosters regulatory convergence among European Union securities regulators.

See the article here:
SEC Enhances Cooperation With EU, Cayman Islands