What Is IOSCO?

The International Organization of Securities Commissions is the international body that brings together the world's securities and futures regulators. Founded in 1983, IOSCO has grown to include over 230 member organisations from more than 130 jurisdictions, covering the vast majority of the world's securities markets by capitalisation and trading volume. Its General Secretariat is based in Madrid, Spain.

IOSCO's three core objectives are: protecting investors, ensuring markets are fair, efficient, and transparent, and reducing systemic risk. To pursue these objectives, IOSCO publishes international standards and principles, facilitates cooperation and information exchange among member regulators, and monitors emerging risks in securities markets and related areas including crypto assets.

Unlike FATF or the BCBS, IOSCO's work is closest to the daily experience of equity, fund, and derivatives investors. Its Principles have shaped disclosure requirements, intermediary conduct standards, market surveillance rules, and clearing and settlement infrastructure across most of the world's major markets.

IOSCO Membership and Governance Structure

IOSCO has three categories of membership. Ordinary members are national securities or derivatives regulators with primary responsibility for regulating securities markets in their jurisdictions. Associate members are national regulators that do not have primary responsibility for securities markets or whose jurisdictions are not yet eligible for ordinary membership. Affiliate members are self-regulatory organisations, stock exchanges, and other market bodies that are not government authorities.

The IOSCO Board, comprising 35 ordinary members, is the primary governing body. It includes the largest capital market regulators by influence and market size: the US SEC and CFTC, the UK FCA, EU's ESMA, Japan's FSA, China's CSRC, India's SEBI, Brazil's CVM, Australia's ASIC, Singapore's MAS, and Canada's provincial regulators. The Board sets IOSCO's strategic direction and approves major policy outputs.

IOSCO operates through standing committees and task forces covering areas such as retail investors, investment management, derivatives, market intermediaries, and emerging market regulation. The Growth and Emerging Markets Committee, composed of regulators from developing economies, is one of IOSCO's largest committees by membership and focuses on capacity building and regulatory development in emerging market jurisdictions.

IOSCO Principles for Securities Regulation

The 38 IOSCO Principles, first published in 1998 and comprehensively revised in 2010, provide a globally accepted framework for assessing the quality and effectiveness of securities regulation. They are organised into nine groups covering: the regulator's responsibilities, powers, and resources; self-regulatory organisations; enforcement powers; regulatory cooperation; issuers' disclosure obligations; auditors, credit rating agencies, and other information service providers; collective investment schemes; intermediaries including brokers and investment advisers; and secondary markets and their infrastructure.

The Principles are used by the International Monetary Fund and World Bank in their Financial Sector Assessment Programs (FSAP), which evaluate national financial systems. A country's FSAP assessment against IOSCO Principles serves as a credibility benchmark for its securities regulation quality and is closely watched by foreign institutional investors considering market entry.

Beyond the Principles, IOSCO publishes more detailed standards and guidance on specific areas. Recent significant output includes the IOSCO Recommendations on Sustainability-Related Practices, Policies, Procedures and Disclosure (2021), which informed the development of IFRS S1 and S2 sustainability disclosure standards; guidance on crypto assets and stablecoins; and reports on margin practices in derivatives markets following the March 2020 market stress.

Cross-Border Cooperation: MMOU and EMMoU

One of IOSCO's most operationally significant contributions is the framework for cross-border regulatory cooperation. Because securities fraud, market manipulation, and insider trading frequently involve actors in multiple jurisdictions, national regulators need formal mechanisms to share information and request assistance from foreign authorities.

The IOSCO Multilateral Memorandum of Understanding (MMOU), signed by members since 2002, commits signatories to provide assistance to each other for the purposes of enforcement, including the ability to obtain bank records, compel testimony, and share non-public information. This bilateral treaty-like arrangement among securities regulators has made cross-border enforcement significantly more effective.

The Enhanced Multilateral Memorandum of Understanding (EMMoU), adopted in 2017, goes further, requiring signatories to be able to freeze assets, obtain existing audit work papers, conduct on-site inspections at the request of foreign regulators, and share information across a broader range of regulatory purposes. Not all IOSCO members have signed the EMMoU, and the US SEC considers EMMoU signatories as demonstrating a higher standard of regulatory cooperation.

What IOSCO Means for Investors

Investors benefit from IOSCO's work primarily through the harmonisation of disclosure, conduct, and investor protection standards across member jurisdictions. When a company lists shares in a major market, the prospectus and ongoing disclosure requirements it faces reflect IOSCO-aligned principles. When a broker-dealer handles a cross-border order, the conduct standards governing its behaviour have typically been shaped by IOSCO guidance.

IOSCO has also played a central role in standardising regulation of credit rating agencies following the 2008 crisis, strengthening derivatives trade reporting requirements, and developing global standards for fund liquidity risk management that protect retail investors in mutual funds and ETFs from the risk of illiquid underlying assets creating redemption problems.

For investors interested in international diversification, IOSCO's website provides a useful starting point for identifying the relevant national regulator in a given jurisdiction. IOSCO does not accept individual investor complaints; complaints should be directed to the national regulator in the jurisdiction where the firm is regulated. If the firm is regulated in a jurisdiction whose regulator is an IOSCO member, there is at least a framework for cross-border cooperation if the situation involves misconduct across multiple markets.

Frequently Asked Questions

What is IOSCO and does it regulate investors directly?

IOSCO is the International Organization of Securities Commissions, the international body whose members include most national securities regulators. IOSCO does not regulate investors or financial firms directly. It develops Principles for Securities Regulation that members implement domestically, facilitates information sharing between regulators, and coordinates cross-border supervisory cooperation. Investors interact with national regulators such as the SEC or FCA, which implement IOSCO's standards into their own rules.

Who are IOSCO's members?

IOSCO has over 230 members, comprising ordinary members (securities and derivatives market regulators), associate members (non-voting national authorities), and affiliate members (self-regulatory organisations). Ordinary members include the SEC and CFTC (US), FCA (UK), ESMA (EU), ASIC (Australia), SEBI (India), MAS (Singapore), FSA (Japan), and OSC (Ontario, Canada). IOSCO's Board, which directs policy, comprises 35 members representing the most significant capital markets, elected by the ordinary membership.

What are the IOSCO Principles for Securities Regulation?

The IOSCO Principles for Securities Regulation, first published in 1998 and updated in 2010, are 38 high-level principles covering the regulator's responsibilities and powers, self-regulatory organisations, enforcement, cooperation in regulation, issuers, auditors and credit rating agencies, collective investment schemes, intermediaries, secondary markets, and clearing and settlement. They serve as a global benchmark for securities regulation quality and are used by the IMF and World Bank in their Financial Sector Assessment Programs.

How does IOSCO address cross-border securities fraud?

IOSCO facilitates cross-border enforcement cooperation through two multilateral memoranda of understanding. The IOSCO MMOU (2002) and the Enhanced MMOU (EMMoU, 2017) are formal frameworks under which member regulators commit to share information, assist investigations, and enforce against cross-border securities violations. If the SEC discovers that suspects in a fraud case are based in another IOSCO member jurisdiction, it can request information and cooperation from that jurisdiction's regulator under the MMOU or EMMoU framework.

References

  • IOSCO: Official Website: Home of IOSCO publications, the Principles for Securities Regulation, MMOU and EMMoU signatories list, and committee reports.
  • SEC: U.S. Securities and Exchange Commission: The SEC is a principal IOSCO ordinary member and one of the most active participants in IOSCO standard-setting and cross-border enforcement cooperation.