NIN 95/32 - XXth Annual Conference of IOSCO, Paris, July 10 to 13, 1995 [NIN - Rescinded]

Attached to this notice is the final communiqué from the 1995 annual conference of the International Organization of Securities Commissions, held in Paris from July 10 to 13, 1995.

IOSCO is an international forum for consultation and cooperation among securities and futures regulators and self regulators. Its purposes as set out in the members resolutions, is to provide a forum for the members:

• to cooperate together to ensure a better regulation of the markets, on the domestic as well as on the international level, in order to maintain just and efficient securities markets;
• to exchange information on their respective experiences in order to promote the development of domestic markets;
• to unite their efforts to establish standards and an effective surveillance of international securities transactions;
• to provide mutual assistance to ensure the integrity of the markets by a rigorous application of the standards and by effective enforcement against offences.

IOSCO has 121 member agencies from 73 countries, representing most of the worlds population and securities market activity. Members fall into three categories. Regular, or voting, members are generally the national securities commissions of the various countries. Each country is entitled to one regular member, although, for historical reasons, Canada has two regular members, the Ontario and Quebec securities commissions. Associate members are other governmental regulatory authorities, including regional authorities. The British Columbia Securities Commission has been an associate member since 1989. The Alberta Securities Commission became an associate member this year. Affiliate members are exchanges, self regulatory organizations or international financial agencies. The Investment Dealers Association of Canada is an affiliate member.

DATED at Vancouver, British Columbia, on August 2, 1995.

Douglas M. Hyndman
Chair



FINAL COMMUNIQUE OF THE XXth ANNUAL CONFERENCE OF THE INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS (IOSCO)

1. The XXth Annual Conference of the International Organization of Securities Commissions (IOSCO) was held in Paris from July 9 to 13,1995.

The 1995 IOSCO Annual Conference was opened by Mr. Jean Saint-Geours, Chairman of the Commission des Opérations de Bourse of France (COB). After the opening speech, Mr. René Monory, President of the French Senate, welcomed the participants. This Annual Conference was hosted by the COB and chaired by Mr. Saint-Geours.

In his opening speech, Mr. Saint-Geours indicated what are, in his view, the three priorities of IOSCO today: "First, public securities regulators should develop cooperation outside of their own field, in particular with banking regulators. Second, international accounting harmonization, which is crucial to compare the valuation of public companies between different markets. Last, the development of the cooperation in enforcement matters." According to Mr. René Monory, "supervision by a public independent regulatory agency has proved itself in France. It ensures the supervision and transparency of transactions, the integrity of market participants, the protection of investors and compliance with conduct of business rules by market intermediaries."

During the opening session, the Conference was also addressed by Mr. Alan Cameron, Chairman of the Executive Committee of IOSCO, Mr. Edward Waitzer, Chairman of its Technical Committee, and Mr. Guillermo Harteneck, Chairman of the Emerging Markets Committee of the Organization.

This annual meeting brings together high-level representatives of the international securities community. It serves as a forum for the presentation and discussion of papers and reports on a wide range of issues of common interest. It also facilitates the development of cooperative relationships between regulators, as well as other market participants.

Regulatory authorities from 57 countries participated in the Conference as members of the Organization; 14 other countries were represented by observers. In all, 650 persons participated in the Conference: 286 delegates of member agencies, 230 observers and 134 accompanying persons.

2. Executive Committee

The Executive Committee is the managing committee of the Organization. In particular, it approves the annual budget and recommends to the Presidents Committee the admission of new members. The Chairmanship of the Executive Committee is held by the Australian Securities Commission, chaired by Mr. Alan Cameron. The Chairman of the Eerging Markets Committee, Mr. Guillermo Harteneck, acts as Vice-Chairman.

Twelve members of the Executive Committee were elected last year by the Presidents Committee for a two-year term: the Australian Securities Commission, the Superintendencia de Compañías of Ecuador, the Commission des Opérations de Bourse of France, the Bundesaufsichtsamt für den Wertpapierhandel of Germany, the Commissione Nazionale per le Società e la Borsa of Italy, the Securities Bureau of the Ministry of Finance of Japan, the Securities Commission of Malaysia, the Comisión Nacional Bancaria y de Valores of Mexico, the Polish Securities Commission, the Capital Market Board of Turkey, the Securities and Investments Board of the United Kingdom and the Securities and Exchange Commission of the United States of America. The Chairman of the Technical Committee, Mr. Edward Waitzer, and the Chairman of the Emerging Markets Committee, Mr. Guillermo Harteneck, also sit on the Executive Committee.

The Executive Committee also includes representatives from the four Regional Standing Committees, which met during the Conference. The Regional Committees are represented on the Executive Committee by: Mr. George Akamiokhor, Securities and Exchange Commission of Nigeria (Africa/Middle East), the Comissão de Valores Mobiliários of Brazil (Interamerican Region), the Office of the Securities and Exchange Commission of Thailand (Asia-Pacific) and the Commission bancaire et financière of Belgium (Europe).

3. Technical Committee

The Technical Committee was created in May 1987 to study the main issues concerning developed securities markets; its members comprise regulatory agencies from Australia, France, Germany, Hong Kong, Italy, Japan, Mexico, Netherlands, Ontario, Quebec, Spain, Sweden, Switzerland, the United Kingdom and the United States. The Committees main objective is to identify regulatory problems related to international securities transactions and to develop practical solutions to these problems.

Mr. Edward Waitzer, Chairman of the Ontario Securities Commission, was Chairman of the Technical Committee during the last year, and Mr. Georg Wittich, Chairman of the Federal Securities Supervisory Office of Germany, was the Vice-Chairman. Both Mr. Waitzer and Mr. Wittich will continue their two-year term until the end of the next Annual Conference.

The Technical Committee has agreed to a request from the leaders of the G-7 countries to prepare a report on measures that IOSCO is taking to foster close international cooperation among financial institution regulators, with the aim of enhancing the monitoring and containment of risks.

The Technical Committee reviewed the May 1995 Windsor Declaration, in which regulators from 16 countries, responsible for supervising the activities of the world's major futures and options market, defined points of consensus concerning cooperation between exchanges, protection of customer positions, funds and assets, default procedures and regulatory cooperation in emergencies. As a result, the Presidents Committee adopted a resolution supporting further work by the Technical Committee, which will be undertaken by several Working Groups, and asking its members to promote the measures agreed to in the Windsor Declaration in respect of all cross-border transactions.

The Technical Committee currently has five Working Groups, composed of experts from its member organizations, which undertake projects in the following areas:

1) Multinational Disclosure and Accounting
2) Regulation of Secondary Markets
3) Regulation of Market Intermediaries
4) Enforcement and the Exchange of Information
5) Investment Management

The various Working Groups study and report on topics as mandated by the Technical Committee.

Multinational Disclosure and Accounting

During the Conference, the Technical Committee and the Board of the IASC (International Accounting Standards Committee) issued a joint press release announcing an important milestone in the development of International Accounting Standards (IAS). The IASC Board, in conjunction with the Technical Committee, has developed a work plan that, upon successful completion, will result in the IAS comprising a comprehensive core set of standards, in the judgement of the Technical Committee. Once this comprehensive core set of standards is completed to its satisfaction, the Technical Committee will be in a position to recommend endorsement of the IAS for cross-border capital raising and listing purposes. IOSCO has already endorsed IAS 7, "Cash Flow Statements" and has indicated to the IASC that 14 of the existing international standards do not require additional improvement, providing that the other core standards are successfully completed.

The goal of both bodies is that financial statements prepared in accordance with the IAS can be used worldwide in cross-border offerings and listings as an alternative to the use of national accounting standards.

Regulation of Secondary Markets

During the Conference, the Working Group submitted to the Technical Committee a report entitled "Summary and Chart of Margin Survey Responses". This survey is focused on margin requirements for equities and derivatives based on equities. The survey covers the margin levels (both for initial and maintenance margin), the procedures for margin calculation and collection, mechanisms set up to deal with extraordinary market conditions and the provisions concerning cross-margining. Additional work on some of the substantive issues will be addressed by the Working Group before the report is published.

Regulation of Market Intermediaries

Continued cooperation with the Basle Committee on Banking Supervision resulted in the publication, in May 1995, of a joint report by the Technical Committee and the Basle Committee on Banking Supervision, entitled "Framework for Supervisory Information about the Derivative Activities of Banks and Securities Firms". This report defines a framework designed to help regulators assess information about the derivative activities of securities firms and banks. It comprises a catalogue of information identified as important for an evaluation of derivatives risks and a common minimum framework of data elements that should be provided to regulators. The release of this report represents an important step in the ongoing cooperation between securities regulators and banking regulators to ensure prudent oversight of the securities activities carried on by securities firms and by banks.

The Technical Committee adopted, during the Conference, a report entitled "The Implications for Securities Regulators of the Increased Use of Value at Risk Models by Securities Firms". After discussing the nature of these models and how they are developed, the report considers the implications for securities regulators of recognising the output from value at risk models for the purpose of calculating capital requirements for market risk. This report will be sent to the Basle Committee in response to its invitation to comment on its April 1995 proposals on capital requirements for market risk. The report proposes that common work with the Basle Committee be pursued on model testing and recommends that further consideration be given to the development of standards of best practice to be adopted by firms using value at risk models for regulatory purposes.

An informal Tripartite Group (comprising members of the Technical Committee of IOSCO, the Basle Committee and the International Association of Insurance Supervisors) has been examining issues relating to the supervision of financial conglomerates, a matter addressed by IOSCO in a resolution adopted in 1992. During the Conference, the Technical Committee approved the publication in the near future of the group's final report with a joint preface and agreed to participate in a continuing forum, which will pursue work on practical issues in this area.

Enforcement and the Exchange of Information

The Technical Committee, after consulting with the Emerging Markets Committee, adopted Guidance Notes designed to assist members of IOSCO in implementing the "Resolution on Commitment to Basic IOSCO Principles of High Regulatory Standards and Mutual Cooperation and Assistance", adopted by the Presidents Committee during the last annual Conference. Work is continuing on measures available on a cross-border basis to protect interests and assets of defrauded investors.

Investment Management

The Technical Committee released a "Report on Investment Management", which contains the paper "Principles for the Regulation of Collective Investment Schemes and Explanatory Memorandum", approved at the last Conference, and a new section entitled "International Comparative Analysis", which reviews the collective investment regulation of several members of IOSCO. These Principles are intended to provide guidance to member agencies in their regulation of collective investment schemes. Implementation of the principles will enhance co-operation among member regulators in supervising and overseeing the increasingly international investment management industry. The principles will also provide guidance for industry participants on the standards to be applied by collective investment schemes seeking access to international markets.

4. Emerging Markets Committee

Last year, the Emerging Markets Committee (EMC) adopted a new structure. One of the main features of this new structure was the creation of five Working Groups, covering topic areas similar to the Working Groups of the Technical Committee. This was done in order to facilitate cooperation at the working group level between the two major working committees of the Organization. Both Committees agreed to exchange observers at the working group level in order to enhance practical cooperation. During the year, these observers reported on the activities of their respective Working Groups, thus relaying essential information to focus the activities of the groups. Cooperation is not a one-way street. For example, the EMC Working Group on Enforcement conducted a very practical survey among its members with a view to establishing a detailed work program. The information collected as a result was so useful that the Technical Committee Working Group on Enforcement asked to be provided with this information, giving its membership a much better understanding of the situation and concerns of emerging markets regulators.

A second feature of the new operational structure is a Steering Committee, composed of the Chairman, the Vice-Chairman and the members of the Emerging Markets Committee that sit on the Executive Committee. The function of this Steering Committee is to prepare a work program, to organize the plenary meetings of the Emerging Markets Committee and to develop suitable training programs.

The Emerging Markets Committee has mainly used the past ten months to organize its work, along the lines of its revised working structure. Each Working Group was given new terms of reference by the Emerging Markets Committee. New work programs and schedules are in the process of being approved for the Working Groups, which will present their reports at the next Annual Conference.

5. Issues considered during the Conference

Panel discussions were held on a variety of issues of interest to both regulators and
practitioners:

• Regulators and the Media
• Emerging Markets
• Is It Possible to Evaluate a Company Objectively?
• The Impact of Institutional Management on Company Resources and Corporate Governance
• Globalization of Risks: Cooperation between Banking and Market Regulators
• The Creation of New Techniques and the Evolution of Markets
• International Cooperation: the Exchange of Information between Regulators and its Development
• The Establishment of Regional Financial Areas and Perspectives on Regulatory Harmonization

6. Admission of New Members

IOSCO accepted, during the Conference, four new voting members: the China Securities Regulatory Commission, the Russian Federation Commission on Securities and the Capital Market, the Securities and Exchange Commission of Bangladesh and the Capital Market Committee of Greece. These admissions are particularly significant for the consolidation of the international role of the Organization, as these four countries represent approximately 30% of the world's population. Before these admissions, IOSCO represented most of the world's market capitalization; after these admissions, IOSCO solifidied its global scope, since its members now come from countries that comprise close to total world population.

In addition, IOSCO accepted one new associate member, the Alberta Securities Commission, and two new affiliate members: the Chicago Board of Trade and the Bolsa de Mercadorias e Futuros of Brazil.

As a result, the membership of IOSCO now stands at 121.

7. Future Conferences

The Organization will hold its next Annual Conference in Montréal, from September 16 to 20, 1996. The 1997 Conference will be held in Taipei and the 1998 Conference, in Nairobi.

Paris, July 13, 1995