2. The term "investor" is intended to include customers or other consumers of financial services.

3. A full list of IOSCO Resolutions appears as Annexure 1. A full list of IOSCO Reports appears as Annexure 2.

4. The address for the IOSCO Secretariat's Internet homepage is http://www.iosco.org/.

5. In addition, sound corporate governance practices are an important additional protection of the interests of shareholders. Corporate governance is generally addressed through statute or exchange listing rules or code of practice, the details of which are outside the scope of this document (see also Annex III).

6. In this document, the term "regulator" is used compendiously. There need not be a single regulator. In many jurisdictions, the desirable attributes of the regulator described in this document are in fact the shared responsibility of two or more government or quasi-government agencies.

7. See IOSCO Resolution 1.

8. Here the term "responsible authorities" encompasses those who are responsible for aspects of securities regulation and other law enforcement governmental and regulatory bodies. 9. In some operational areas, and in some cases, particularly in the areas of surveillance and enforcement, consultation and disclosure may be unnecessary or inappropriate as it may compromise the effective implementation of the policy. 10. Report of IOSCO Emerging Markets Committee, June 1996 (53) Legal and Regulatory Framework for Exchange Traded Derivatives, at 6-9 and COSRA Report, Principles of Effective Market Oversight, May 1995. 11. COSRA Report Principles of Effective Market Oversight, May 1995. 12. SROs are generally non-governmental agencies and so will not always be subject to the same standards as apply to a government agency. 13. See IOSCO Resolutions 9, 39 and 40. 14. Here the information to be provided may include records kept in the ordinary course of business, information prepared in response to a particular inquiry or as part of a regulator reporting cycle. 15. See IOSCO Resolutions 35, 37, 39 and 40.

16. Other action may include the imposition of trading restrictions or requirements on individual market participants. For example, position limits, reporting requirements, liquidation only trading or special margin requirements. 17. Resolution on Enforcement Powers, IOSCO Presidents' Committee. November 1997. 18. See generally Report of IOSCO Technical Committee, October 1992 (25) Report on Money Laundering. 19. See IOSCO Resolutions 9, 19, 20, 23 26, 28, 33, 34 and 40. 20. Report on the Self-Evaluation Conducted by IOSCO Members Pursuant to the 1994 Resolution on Commitment to Basic IOSCO Principles of High Regulatory Standards and Mutual Cooperation and Assistance, November 1997 (75). See also IOSCO Resolutions 39 and 40. 21. See IOSCO Resolutions 9, 19, 20, 23 26, 28, 33, 34 and 40, 1994 Resolution of IOSCO Presidents' Committee on Commitment to Basic IOSCO Principles of High Regulatory Standards and Mutual Cooperation and Assistance. See IOSCO Resolution 31. 1997 Resolution of IOSCO Presidents' Committee on Principles for Record Keeping, Collection of Information, Enforcement Powers and Mutual Cooperation to Improve the Enforcement of Securities and Futures Laws. 22. The latter may require, for example, among other things: routine sharing of information on questionable activities and proven frauds; information on any concern about an applicant for licensing, listing or registration; information about the current circumstances of a license holder or issuer; information that may be needed to minimize the adverse effects of market disruptions, including contingency plans, contact persons and structural measures to address market disruption; and information on market conditions such as actions taken by market authorities, prices, trading activities, and market data. 23. As to the content of memoranda of cooperation, see generally Report of IOSCO Technical Committee September 1991 (17) Principles of Memoranda of Understanding. 24. Report of IOSCO Technical Committee, July 1996 (55) Measures Available on a Cross-Border Basis to Protect Interests and Assets of Defrauded Investors. 25. Report of IOSCO Technical Committee, October 1994 (41) Report on Issues Raised for Securities and Futures Regulators by Under-Regulated and Uncooperative Jurisdictions. 26. IOSCO Consultation Paper (1), Supervision of Financial Conglomerates, February 1998. 27. The obligation to make relevant disclosure is not limited to issuers. It will be apparent from the text where others have a relevant obligation. 28. Most jurisdictions separately regulate public offerings thereby ensuring general protection of the public while reducing the regulatory burden in the case of non-public undertakings. The definition of what amounts to an offer to the public varies as does the threshold for what constitutes public trading. 29. Derivatives markets are in a separate category. The market operators and intermediaries must ensure, among other things, proper disclosure of the terms of contracts traded, the mechanics of trading and the generic risks related to gearing or leverage. 30. See Report of IOSCO Technical Committee, September 1991 (16) International Equity Offers and (38), (61) and (70). See also Reports of IOSCO Development Committee, October 1992 (24) Report on Disclosure Requirements and October 25, 1993 (32) Report on Disclosure, Report of IOSCO Technical Committee, October 1994 (39) Report on Disclosure and Accounting and Report of IOSCO Emerging Markets Committee, September 1996 (62) Reporting of Material Events in Emerging Markets.. See also IOSCO Report, September 1998, International Disclosure Standards for Cross-Border Offerings and Initial Listings by Foreign Issuers. 31. Reference should also be made to so-called "merit based" regulation in which the regulator takes some responsibility for assessing the quality of a proposed offering. This approach is generally associated with developing markets and may be of particular benefit where a market lacks a group of analysts and advisers who could analyse information if it were made publicly available. It is therefore, generally regarded as transitional and not necessary in a fully developed market. 32. See IOSCO Resolution 12. 33. See generally Report of IOSCO Technical Committee, October 1994 (40) Report on Investment Management and Report of IOSCO Technical Committee, September 1997 (68) Principles for the Supervision of Operators of Collective Investment Schemes. 34. In some jurisdictions, closed end funds are not subject to special licensing or supervisory requirements and are, instead, regulated according to the terms of relevant exchange listing rules. 35. See generally Report of IOSCO Technical Committee, September 1996 (60) Guidance on Custody Arrangements for Collective Investment Schemes. 36. See generally Report of IOSCO Technical Committee, September 1996 (59) Disclosure of Risk - A Discussion Paper. 37. See generally Report of IOSCO Technical Committee, August 1996 (57) Client Asset Protection and IOSCO Resolution 20. 38. Report of IOSCO Technical Committee, September 1997 (68) Principles for the Supervision of Operators of Collective Investment Schemes. 39. A mandatory requirement in some jurisdictions. 40. See generally Report of IOSCO Technical Committee, June 1996 (54) Regulatory Cooperation in Emergencies - A Discussion Paper. 41. See generally Report of IOSCO Technical Committee, June 1996 (52) Discussion Paper on International Cooperation in Relation to Cross-Border Activity of Collective Investment Schemes.

42. See IOSCO Resolutions 13 and 27. See also Reports of IOSCO Technical Committee, May 1998, Methodologies for Determining Minimum Capital Standards for Internationally Active Securities Firms Which Permit the Use of Models Under Prescribed Conditions (77); and Risk Management and Control Guidance for Securities Firms and their Supervisors, May 1998 (78), and IOSCO Resolution 18, and, in particular, the discussion of the various types of risk that market intermediaries may have to address: Market Risk, Credit Risk, Liquidity Risk, Operational Risk, Legal Risk and Systemic Risk. See also Framework for Disclosure of Trading and Derivatives Activities of Banks and Securities Firms (81),Joint Report by the Basle Committee on Banking Supervision and by the Technical Committee of IOSCO (Sept.2, 1998). 43. In some jurisdictions, authorization or registration is used instead of licensing. 44. Many jurisdictions set out detailed criteria relating to education, training, experience and the so called "fitness and properness" of an applicant to be met before a person may be licensed. These criteria are intended to protect the investor. 45. The information must be freely available and readily accessible. It may be maintained in a central repository by the regulator or by an SRO. 46. See Reports of IOSCO Technical Committee, May 1998, Methodologies for Determining Minimum Capital Standards for Internationally Active Securities Firms Which Permit the Use of Models Under Prescribed Conditions (77); and Risk Management and Control Guidance for Securities Firms and their Supervisors, May 1998 (78), See also IOSCO Resolution 18.. 47. See Report of IOSCO Technical Committee, November 13, 1990 (14) Capital Requirements for Multinational Securities Firms. 48. See IOSCO Technical Committee Paper (78), Risk Management and Control Guidance for Securities Firms and their Supervisors, May 1998 49. See IOSCO Resolution 16. See also Report of IOSCO Technical Committee, July 9, 1990 (8) International Conduct of Business Principles. 50. See Report of IOSCO Technical Committee, July 1994 (35) Operational and Financial Risk Management Control Mechanisms for Over-the-Counter Derivatives Activities of Regulated Securities Firms. 51. Here, "operational risk" refers generally to the risk of loss through a failure of systems or deliberate or negligent conduct of staff. 52. Regulators should also play an active role in facilitating training and development programs. 53. See Report of IOSCO Technical Committee, March 7, 1996 (49) Report on Cooperation Between Market Authorities and Default Procedures. 54. See IOSCO Resolutions 35, 37, 39 and 40.

55. These matters are of particular importance where there are no entry criteria based on education, training or experience. 56. See Reports of IOSCO Technical Committee, October 1994 (42) Report on Issues in the Regulation of Cross-Border Proprietary Screen-Based Trading Systems, and June 1990 (6) Screen-Based Trading for Derivative Products. See also Report of IOSCO Technical Committee, September 1998 (80) : Securities Activity on the Internet.

57. See report of IOSCO Technical Committee, December 1992 (27) Transparency on Secondary Markets - A Synthesis of the IOSCO Debate.

58. See generally the discussion at Section 7.2.3 on the content of information.

59. Generally, Report of IOSCO Technical Committee, March 1996 (49) Report on Cooperation Between Market Authorities and Default Procedures.

60. See IOSCO Resolutions 13 and 27. See also Report of IOSCO Emerging Markets Committee, November 1997 (73) Towards a Legal Framework for Clearing and Settlement in Emerging Markets.

61. The regulator should require sufficient stress testing of risk management and back-up systems.

62. See Reports of IOSCO Technical Committee, March 1996 (50) Report on Margin and October 1992 (22) Coordination Between Cash and Derivative Markets.

63. See Reports of IOSCO Technical Committee, March 1996 (50) Report on Margin and October 1992 and (22) Coordination Between Cash and Derivative Markets for a discussion of? Setting Margin Levels; Calculation; Collection and Monitoring; Default; Extraordinary Conditions; Effective Communication; Cross Margining.

64. Novation must be effective on insolvency if it is to contribute to risk management.

65. Short selling is a necessary component of exchange traded futures and options markets.