Cabinet approves signing of International Organization of Securities Commissions Enhanced Multilateral Memorandum of Understanding by International Financial Services Centres Authority
The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today has given its approval the proposal for signing of International Organization of Securities Commissions (IOSCO) Enhanced Multilateral Memorandum of Understanding by International Financial Services Centres Authority (IFSCA).
Purpose of signing the Enhanced Multilateral Memorandum of Understanding (EMMoU):
- The EMMoU will be an enabler for IFSCA to ensure effective enforcement for various cross-border activities in the securities markets in IFSC.
- The EMMoU will enable IFSCA to cooperate and exchange information with the securities markets' regulators with respect to the following additional "ACFIT" powers available under the EMMoU:
- 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); regarding the matters set forth in the request for assistance, in accordance with the rights and privileges afforded by the laws and regulations applicable in the jurisdiction of the requested authority;
- To Freeze assets if possible, or, if not, advise and provide information on how to Freeze assets, at the request of another signatory;
It is to be noted that the EMMoU an organization may require or request for the freeze or sequestration of funds or assets located in the Requested Authority's jurisdiction. Where such assistance is not available, informing the Requesting Authority about the relevant funds or assets located in the Requested Authority's jurisdiction, and to the fullest extent possible assisting the Requesting Authority with the use of legal procedures and other means to freeze or sequester those funds or assets.
- To obtain and share existing Internet service provider (ISP) records (not including the content of communications) including with the assistance prosecutor, court or other authority, and to obtain the content of such communications from authorized entities; and
- 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.
Impact, including employment generation potential:
IFSCA becoming a signatory to the IOSCO EMMoU will result in building confidence and credibility amongst the investors and stakeholders. This may lead to larger investment flows from the overseas jurisdictions in GIFT IFSC which could boost employment in the financial sector in the long run.
Background
The IFSCA was established under the International Financial Services Centres Authority Act, 2019 ("IFSCA Act") as a unified regulator of banking, insurance, capital market, pension fund and allied activities for development and regulation of financial products, financial services and financial institutions in the International Financial Services Centres (IFSCs) in India.
The International Organization of Securities Commissions (IOSCO), established in1983, is the international body that brings together the world's securities regulators and is recognized as the global standard setter for the securities sector. It develops, implements and promotes adherence to internationally recognized standards for securities regulation. It also works intensively with the G20 and the Financial Stability Board (FSB) on the global regulatory reform agenda.
One of the main objectives of IOSCO is to enhance investor protection and promote investor confidence in the integrity of securities markets globally, through strengthened information exchange and cooperation in enforcement against misconduct. IOSCO has a multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (established in 2002) which sets an international benchmark for cross-border co-operation amongst the signatories (regulators of securities markets globally). Currently, there are 129 signatories to the IOSCO MMoU.
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 in order 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 established EMMoU with the expectation that it 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. The objective is for all MMoU signatories to migrate eventually to the EMMoU. Presently there are 23 signatories to IOSCO EMMoU. It is also to be noted that SEBI already has an existing MMoU and EMMoU with IOSCO for the same purpose.
IFSCA is a member of IOSCO with effect from December 2020. IFSCA has already become a signatory to the IOSCO MMoU on August 03, 2022. Considering the interconnectedness of the securities markets at GIFT IFSC with other international markets, it is important to have necessary information sharing arrangements for effective investigations and enforcement of the securities laws in form of IOSCO EMMoU.
The additional powers under the TOSCO EMMoU will foster greater cross-border enforcement cooperation and assistance among securities regulators, enabling the securities regulators to respond to the risks and challenges posed by globalization and advances in technology. Further, the provisions of the EMMoU (like the MMoU) are not intended to create legally binding obligations or supersede domestic laws. Signatories thus will execute their responsibilities under the EMMoU within their legal framework.
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DS/SKS
(Release ID :253490)