SFC Signs on to IOSCO’s Cross-Border Regulation Plans

Signatories to the EMMoU will be able to extend their regulatory reach across the globe

Hong Kong’s Securities and Futures Commission (SFC) announced this Friday that it would be adopting the International Organization of Securities Commissions’ (IOSCO) enhanced standard for cross-border enforcement cooperation.

IOSCO members approved the Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU) in March of 2017. Aside from having a long-winded name, the regulation aims to provide securities regulators across the globe with greater powers to clamp down on financial misconduct.

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The regulation was put in place 15 years after similar regulation, the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU), was deemed unfit for purpose. IOSCO claimed that the technological and regulatory landscape had changed to such an extent in those 15 years that a new form of cross-border cooperation between regulators was required.

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New powers for a new era

Ashley Alder, the SFC’s CEO, commented on the regulator’s decision, saying: “The SFC is pleased to be one of the first signatories to the EMMoU. The EMMoU will foster more effective international cooperation among securities regulators in combating financial misconduct,”

The EMMoU will grant regulators across the globe significant power. Amongst other things, signatories to the agreement will be able to obtain company audits, compel individuals to give testimony, and freeze assets.

Any securities regulator that wishes to become a member of IOSCO must now sign EMMoU. This is understandable given that securities regulators operate in an era when global trade, and cross-border criminal behavior, has never been easier to undertake.

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