Joint Forum Publishes Principles for the Supervision of Financial Conglomerates (with Lofchie Comment)
The Joint Forum - which comprises the Basel Committee on Banking Supervision, the International Organization of Securities Commissions and the International Association of Insurance Supervisors - issued a final report on Principles for the Supervision of Financial Conglomerates. The updated Principles for the Supervision of Financial Conglomerates supersede the Compendium of documents produced by the Joint Forum in 2001. The Joint Forum's aim was to "focus on closing regulatory gaps, eliminating supervisory 'blind spots' and ensuring effective supervision of risks arising from unregulated financial activities and entities."
The principles are organized into the following five sections:
- Supervisory powers and authority
- Supervisory responsibility
- Corporate governance
- Capital adequacy and liquidity
- Risk management.
Lofchie Comment: If you read the section of the report (beginning on page 9) on the legal framework of supervisors (that is, how the regulators should be organized and coordinated), and think about that Platonic structure as against the way that the U.S. regulatory structure is designed, you are likely to reach the conclusion that the Joint Forum did not use our regulatory structure as a model for the ideal. (I don't think we would even rise to the level of a shadow of the ideal.)
View report here (links externally to IOSCO website).See also: Joint Forum Press Release.