Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information
The background to the EMMoU
In 2002, IOSCO established its first Multilateral Memorandum of Understanding ("2002 MMoU") to serve and support its objectives of protecting investors and ensuring that markets are fair, efficient and transparent. The 2002 MMoU has become the global benchmark for international cooperation in the enforcement of securities and derivatives laws and regulations; yet, as technology and society evolve, enforcement and cooperation among securities regulators must also evolve.
Since the 2002 MMoU was established, there has been a significant increase in globalisation and the interconnectedness of financial markets, as well as advancements in technology that have changed the way that the securities and derivatives industry operates and how violations of securities and derivatives laws occur. The lessons of the global financial crisis, and the experience gained by the signatories to the 2002 MMoU have made clear that it is critical to enhance information sharing and cooperation between IOSCO members: to keep pace with technological, societal and market developments; to bolster deterrence; and to ensure that IOSCO continues to meet its objectives.
For these reasons, IOSCO has now established this Enhanced Multilateral Memorandum of Understanding ("EMMoU") with the expectation that its signatories will, by availing themselves of new forms of assistance and continuing to provide each other with the Fullest Assistance Permissible, increase the effectiveness of their investigations and the enforcement of their jurisdiction's Laws and Regulations, whilst recognising the rights and privileges afforded to Persons in their respective jurisdictions.
EMMoU will co-exist with MMoU
The MMoU will remain in effect as long as, and until, any signatories continue to wish to use it. However, the objective is for all MMoU signatories to migrate eventually to the EMMoU.
What are the key new EMMoU powers?
The additional key powers that IOSCO has identified as necessary to ensure continued effectiveness in safeguarding market integrity and stability, protecting investors and deterring misconduct and fraud include:
- To obtain and share Audit work papers, communications and other Information relating to the audit or review of financial statements
- To Compel physical attendance for testimony (by being able to apply a sanction in the event of non-compliance).
- To Freeze assets if possible, or, if not, advise and provide information on how to Freeze assets, at the request of another signatory
- To obtain and share existing Internet service provider (ISP) records (not including the content of communications) including with the assistance of a prosecutor, court or other authority, and to obtain the content of such communications from authorized entities.
- To obtain and share existing telephone records (not including the content of communications) including with the assistance of a court, prosecutor or other authority, and to obtain the content of such communications from authorized entities.
Additionally, The EMMoU envisages the obtaining and sharing of existing communications record held by regulated firms.
Why is the new standard important?
The new powers, which are set out in full in Article 3 of the EMMoU, will foster greater cross-border enforcement cooperation and assistance among securities regulators, enabling them to respond to the risks and challenges posed by globalisation and advances in technology since 2002. In particular, access to the powers to compel subscriber records from telephone and internet communications providers is important, because so many market abuse investigations rely on subscriber records and traffic data to show the passage of information. IOSCO is heartened by the efforts signatories have made to reform legislation and achieve compliance with the current MMoU. The enhanced standard can enable IOSCO to serve as an important agent for further change to ensure enforcement and co-operation remain effective.
EMMoU will have three appendices
The IOSCO EMMoU will have three appendices- A, B & C. Appendix A will have two tiers: Appendix A.1 listing signatories that hold the whole set of ACFIT powers; and Appendix A.2 listing signatories that hold the powers under ACF powers.
A jurisdiction will be an IOSCO EMMoU signatory if it is accepted as signatory of either Appendix A.1 or Appendix A.2.
Appendix B includes the procedures for the application and reapplication to become a signatory to the EMMoU, a section on the monitoring of the operation of the EMMoU, the EMMoU questionnaire. Appendix C contains the form for drafting requests for information under the EMMoU.
How to apply:
- The application should be sent to the following email address: email@example.com
- Please send a cover letter signed by the head of your authority to the Secretary General of IOSCO mentioning whether your application is for Appendix A1 (ACFIT powers) or Appendix A2 (ACF powers). Please provide at least one contact person mentioning the name, designation, email address, telephone number etc. The contact person could be contacted by the Screening Group during its verification of the application.
- Attach a duly filled-in EMMoU questionnaire with your application (soft copy only).
- Please provide a few introductory paragraphs on your market structure1, and the regulatory powers and applicable legislation of your authority.
1 This needs to be short and high level. It should focus on the relevance of market structure to the 5 EMMoU powers.
- Responses should identify and explain the applicant's legal authority to meet the specific provisions cited in the questionnaire.
- Attach the relevant legislation which you have mentioned in your EMMoU Questionnaire (soft copies only). Alternately, you may wish to include hyperlinks to the relevant legislation.
- The responses to the EMMoU questionnaire and key accompanying material should be provided in English. (Relevant legislation cited in the responses and any MoUs with third parties)
Who has signed
The list of signatories of the EMMoU is available on the IOSCO website here (to be uploaded in future).