IOSCO Issues Final Report Regarding Prudential Standards in the Securities Sector

IOSCO published a final report, titled "A Comparison and Analysis of Prudential Standards in the Securities Sector," that reviews similarities, differences and gaps among various prudential/capital frameworks.

The report focuses on various approaches to the Net Capital Rule ("NCR"), particularly those of the SEC and CFTC, as well as the Capital Requirements Directive ("CRD"), which is based on the Basel Committee approach.

The report found that the two key approaches to prudential requirements have methodological similarities and differences: (i) the NCR approach is intended to ensure that securities firms have sufficient liquid balance sheet assets to be wound-down within a short time should they fail, whereas the CRD approach focuses on the solvency of the firm; and (ii) both approaches share at least one common objective: to ensure that a securities firm would hold sufficient capital to protect customers and creditors from losses if the firm were to fail.

See: A Comparison and Analysis of Prudential Standards in the Securities Sector; Press Release.