Overview of Global Regulators
Navigating the ‘alphabet soup’ of global organisations
by Kathleen Hughes, Vice Chair, and Brian Campbell, Chair Investment Committee, IMMFA
Policymakers are engaging globally on regulatory initiatives
- Momentum continues to build behind reforms to reduce the perceived risk of systemic crisis in money markets. Authorities internationally are working – in parallel and in some cases in collaboration – to reduce the potential for regulatory arbitrage in a globally interconnected industry. More news of proposals is anticipated in the coming months.
- The roles of the organisations summarised here vary. Only a select few have the authority to submit formal regulatory proposals to be signed into law. Where possible, we have distinguished between those whose function is mainly consultative, to guide and influence reforms, and those able to submit formal regulatory proposals to be signed into law, or to enforce them.
There is no single global regulatory or legal authority: regulatory authorities vary by the jurisdictions in which money market funds are registered. Accordingly, there is no single global definition of money market fund requirements. The input from international bodies is primarily consultative, in that they can issue recommendations to guide international practice, and these recommendations may form the basis for enforceable principles in national jurisdictions.
IOSCO – International Organization of Securities Commissions
- An association of organisations that regulate securities and futures markets around the world. Created in 1983, recognised as the international standard setter for securities markets.
- The IOSCO Principles, or Objectives and Principles of Securities Regulation, are internationally recognised regulatory benchmarks.
- Worked on the money market reform component of FSB’s recommendations, which are not enforceable but intended to set a benchmark for global practice.
- In April 2012, IOSCO published a consultation report, Money Market Fund Systemic Risk Analysis and Reform Options, which provided a preliminary analysis of the possible risks that money market funds could pose to financial stability and proposed a broad range of possible policy options. IOSCO sought public comment on the consultation with a due date of June 2012.
- In October 2012, IOSCO published its final report on policy recommendations for money market funds. IOSCO proposes to conduct a review of the application of these recommendations within two years with a view to assess whether the recommendations should be revised, complemented or strengthened.
Members include the main financial regulators from over 100 countries (including the SEC in the US, Financial Conduct Authority and Prudential Regulation Authority (formerly known as Financial Services Authority)) in the UK, France’s AMF and Germany’s BaFin), who regulate more than 90% of global securities markets. Related committees include a Monitoring Group comprising international financial institutions and regulatory bodies, such as the Basel Committee on Banking Supervision, European Commission and Financial Stability Board.
FSB – Financial Stability Board
- Formed in 2009 following the global financial crisis.
- Evolved from the Financial Stability Forum, or FSF, a global organisation formed in 1999 by the finance ministers and central bank governors of the Group of Seven (G7) to oversee international financial stability.
- In October 2011, FSB released guidance on reducing the systemic risk of shadow banking and part of that guidance covered money market funds. Specifically, the FSB identified that IOSCO would examine regulator action related to money market funds.
- In November 2012, FSB formally endorsed IOSCO’s aforementioned policy recommendations on money market funds.
Members comprise representatives – central bankers and/or treasury officials – from 24 countries including the G-20. National representatives include regulators such as the SEC, Germany’s BaFin, France’s AMF and the UK’s FSA. International members include the Bank for International Settlements; the European Central Bank; the European Commission; the International Monetary Fund (IMF); Organisation for Economic Co-operation and Development; and The World Bank.