The Cayman Islands Monetary Authority has signed a memorandum of understanding with the United States Securities and Exchange Commission, governing the oversight by both supervisory bodies of regulated entities operating in Cayman and the US.
The supervisory cooperation arrangement will enhance the ability of the SEC and the Monetary Authority to exchange information on entities such as investment advisors and fund managers regulated in both jurisdictions.
The arrangement establishes a mechanism for continuous and on-going consultation, cooperation and the exchange of supervisory information needed to monitor risk concentrations and identify emerging systemic risks. The MOU also facilitates the ability of the supervisory bodies to conduct on-site examinations of registered entities located abroad.
The MOU details the scope of consultation, cooperation and information exchange between CIMA and the SEC, the procedures for carrying out on-site inspections and for the execution of requests for assistance, the permissible uses of information provided, the confidentiality of information and the process for onward sharing of information in certain circumstances.
CIMA’s Managing Director Cindy Scotland and the SEC’s Chairman Mary Schapiro, signed the agreement, which became effective on 9 March.
The MOU supplements the International Organisation of Securities Commissions (IOSCO) multilateral MOU on cooperation in securities regulation, to which both the SEC and CIMA are signatories and which focuses more on cooperation on enforcement matters between the parties.
“Supervisory cooperation arrangements help the SEC build closer relationships with its counterparts to cooperate and consult on each other’s oversight activities in ways that may help prevent fraud in the long term or lessen the chances of future financial crises,” said Ethiopis Tafara, director of the SEC’s Office of International Affairs.
Mrs. Scotland explained that the process of negotiating the latest agreement was enhanced by the solid ties that the two authorities have established over time: “CIMA and the SEC have had a strong working relationship for many years. This has enabled us to collaborate on several levels,” she said. “For example, we have been able to obtain information from, and provide information to, the SEC that has been valuable in both regulators’ routine supervisory activities as well as, on occasion, in criminal investigations that have resulted in convictions. We have conducted joint on-site inspections of Cayman-regulated funds and securities entities, and have worked together to provide training for Cayman and regional regulators.”
The Cayman Islands Premier and Minister of Finance McKeeva Bush said the MOU demonstrates CIMA’s commitment to continuing the work with the SEC to fulfill their respective regulatory mandates. “It shows, too, the commitment of the Cayman Islands to providing the highest quality domicile for financial services. The signing of this MOU adds to the growing list of international regulatory and supervisory bodies with which the Cayman Islands has entered agreements and is a key endorsement of our financial services regime,” Mr. Bush said. “We are convinced that this is not only good for ensuring stability and integrity of the global financial system, but is good for business for this jurisdiction.”
The CIMA-SEC MOU is the 23rd cooperation and information exchange agreement that CIMA has effected with overseas regulatory authorities since 1998.
CIMA’s Chairman George McCarthy also emphasised the commitment of the Monetary Authority to collaborate and cooperate with financial services authorities in all the jurisdictions with which Cayman-regulated entities do business.
“In addition to the agreements that CIMA already has in place, we actively seek to formalise cooperation with other regulators. This MOU with the SEC is particularly important as Cayman is a major domicile for hedge funds and securities in which US institutions and persons of high net worth invest. It will enable more effective supervision on both sides,” Mr. McCarthy said.