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iosco money market fund consultation May 14, 2012

Posted by Bradley in : transparency , trackback

At the end of last week three SEC Commissioners issued a statement that IOSCO’s recent consultation document on Money Market Funds had been issued without their agreement:

On April 27, 2012, IOSCO published the … Consultation Report without the concurrence of the U.S. Securities and Exchange Commission (the Commission).
We feel that it is important to state for the record that the Consultation Report does not reflect the views and input of a majority of the Commission. In fact, a majority of the Commission expressed its unequivocal view that the Commission’s representatives should oppose publication of the Consultation Report and that the Commission’s representatives should urge IOSCO to withdraw it for further consideration and revision. Accordingly, the Consultation Report cannot be considered to represent the views of the U.S. Securities and Exchange Commission.

The statement is a little ambiguous as to whether the Commissioners are complaining that the SEC’s representatives who attended the IOSCO technical committee meeting which approved the issuance of the consultation document were not effective enough or that the other members of the committee did not pay enough attention to their views. And the statement is silent as to the substance of the disagreement with the consultation document. Presumably the couple of weeks between the publication of the consultation document and the statement was a period of lobbying for withdrawal of the consultation. IOSCO is supposed to operate through consensus, and does not explain the views of its members. Presumably the point of the public statement is to show that there was a lack of consensus about the document, making the document appear less legitimate. But IOSCO doesn’t operate according to clear public process standards anyway, and doesn’t publish minutes of meetings of its committees. And the document is after all merely a consultation document:

The objective of this consultation paper is to share with market participants IOSCO’s preliminary analysis regarding the possible risks MMFs may pose to systemic stability, as well as possible policy options to address these risks.

Making IOSCO look less legitimate may harm confidence in the transnational standards system. I’m not sure if that would be a good or a bad thing.

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