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Compliance with IOSCO requirements. AMEDA Leadership Forum Alexandria Egypt Monday 27 th April 2009 by Dr. Ashraf EL Sharkawy Senior Advisor to the CMA chairman Presented by Mr. Francois Jude Pepin. Introduction.

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Compliance with iosco requirements

Compliance with IOSCO requirements

AMEDA Leadership Forum

Alexandria Egypt

Monday 27th April 2009

by

Dr. Ashraf EL Sharkawy

Senior Advisor to the CMA chairman

Presented by Mr. Francois Jude Pepin


Introduction

Introduction

Although there are local differences in market structures, IOSCO objectives form a basis for an effective system of securities regulation


Iosco

IOSCO

Maintains uniformly high standards across Securities Markets Commissions; and

Provides 30 high level “Principles” – a broad framework for the regulation of securities;

Adopted by 110 members of IOSCO


The preamble to iosco s by laws states

The Preamble to IOSCO’s By-Laws states


Objectives of the principles framework

Objectives of the Principles framework


Compliance with iosco requirements

The Principles cover


The principles can be grounded on eight categories

The principles can be grounded on eight categories


Principles relating to the regulator

Principles Relating to the Regulator

The responsibilities of the regulator should be clear and objectively stated.

Implemented by the CMA according to law 95 Art. 2 & 43

The regulator should be operationally independent and accountable in the exercise functions and powers.

Implemented by the CMA according to law 95 Art. 44

The regulator should have adequate powers, proper resources and the capacity to perform its functions and exercise its powers.

Implemented by the CMA according to law 95 Art. 47 & 49

8


Compliance with iosco requirements

Cont.,

  • The regulator should adopt clear and consistent regulatory processes.

    Implemented by the CMA according to law 95 Art. (1-73)

  • The staff of the regulator should observe the highest professional standards, including appropriate standards of confidentiality.

    Implemented by the CMA according to law 95 Art. 64

9


Principles for self regulation

Principles for Self-Regulation

The regulatory regime should make appropriate use of Self-Regulatory Organizations (SROs) that exercise some direct oversight responsibility for their respective areas of competence and to the extent appropriate to the size and complexity of the markets.

Implemented by the CMA according to law 95 Art. 26

SROs should be subject to the oversight of the regulator and should observe standards of fairness and confidentiality when exercising powers and delegate responsibilities.

Implemented by the CMA according to law 95 Art. 7& Art. 93 of the executive regulations

10


Principles for the enforcement of securities regulation

Principles for the Enforcement of Securities Regulation

The regulator should have comprehensive inspection, investigation and surveillance powers.

Implemented by the CMA according to law 95 Art. 44& 49

The regulator should have comprehensive enforcement powers.

Implemented by the CMA according to law 95 & the executive regulations

The regulatory system should ensure an effective and credible use of inspection, investigation, surveillance and enforcement powers and implementation of an effective compliance program.

Implemented by the CMA according to law 95 & the executive regulations

11


Principles for cooperation in regulation

Principles for Cooperation in Regulation

The regulator should have authority to share both public and non-public information with domestic and foreign counterparts.

Implemented by the CMA according to law 95& Art 101 & 102 of the executive regulations

Regulators should establish information sharing mechanisms that set out when and how they will share both public and non-public information with their domestic and foreign counterparts.

Through MOU with similar authorities

The regulatory system should allow for assistance to be provided to foreign regulators who need to make inquiries in the discharge of their functions and exercise of their powers.

Through MOU with similar authorities

12


Principles for issuers

Principles for Issuers

There should be full, accurate and timely disclosure of financial results and other information which is material to investors’ decisions.

Implemented by the CMA according to law 95 Art. 4,5,6 & 7

Holders of securities in a company should be treated in a fair and equitable manner.

Implemented by the CMA according to law 95 & Art. 11 of the executive regulations

Accounting and auditing standards should be of a high and internationally acceptable quality.

Implemented by the CMA according to law 95 & Art. 58 of the executive regulations

13


Principles for collective investment schemes

Principles for Collective Investment Schemes

The regulatory system should set standards for the eligibility and the regulation of those who wish to market or operate a collective investment scheme.

Implemented by the CMA according to law 95& Art 140 of the executive regulations

The regulatory system should provide for rules governing the legal form and structure of collective investment schemes and the segregation and protection of client assets.

Implemented by the CMA according to law 95& Art 141 , 170 & 171 of the executive regulations

14


Principles for collective investment schemes cont

Principles for Collective Investment Schemes , Cont.,

Regulation should require disclosure, as set forth under the principles for issuers, which is necessary to evaluate the suitability of a collective investment scheme for a particular investor and the value of the investor’s interest in the scheme.

Implemented by the CMA according to law 95 & Art. 179 of the executive regulations

Regulation should ensure that there is a proper and disclosed basis for asset valuation and the pricing and the redemption of units in a collective investment scheme.

Implemented by the CMA according to law 95 & Art. 177 of its executive regulations

15


Principles for market intermediaries

Principles for Market Intermediaries

Regulation should provide for minimum entry standards for market intermediaries.

Implemented by the CMA according to law 95 Art. 29

There should be initial and ongoing capital and other prudential requirements for market intermediaries that reflect the risks that the intermediaries undertake.

Implemented by the CMA according to law 95 & Art. 41, 125 & 127 of the executive regulations

16


Compliance with iosco requirements

Cont.,

Market intermediaries should be required to comply with standards for internal organization and operational conduct that aim to protect the interests of clients, ensure proper management of risk, and under which management of the intermediary accepts primary responsibility for these matters.

Implemented by the CMA according to law 95 Art. 30 & Art. (214-268) of the executive regulations

There should be a procedure for dealing with the failure of a market intermediary in order to minimize damage and loss to investors and to contain systemic risk.

Implemented by the CMA according to law 95 Art. 31

17


Principles for the secondary market

Principles for the Secondary Market

  • The establishment of trading systems including securities exchanges should be subject to regulatory authorization and oversight.

    Implemented by the CMA according to law 95 & Art. 86 & 93 of the executive regulations

  • There should be ongoing regulatory supervision of exchanges and trading systems which should aim to ensure that the integrity of trading is maintained through fair and equitable rules that strike an appropriate balance between the demands of different market participants.

    Implemented by the CMA according to law 95 & Art. 21 & 94 of the executive regulations

  • Regulation should promote transparency of trading.

    Implemented by the CMA according to law 95 & Art. 102 of the executive regulations

18


Compliance with iosco requirements

Cont.,

  • Regulation should be designed to detect and deter manipulation and other unfair trading practices.

    Implemented by the CMA according to law 95 Art. 21

  • Regulation should aim to ensure the proper management of large exposures, default risk and market disruption.

    Implemented by the CMA according to law 95 Art. 23

  • Systems for clearing and settlement of securities transactions should be subject to regulatory oversight, and designed to ensure that they are fair, effective and efficient and that they reduce systemic risk.

    Implemented by the CMA according to law 95 Art. 103

19


Compliance with iosco requirements

Thank You


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