The FSF will serve as the institutionalized multilateral inter-agency forum that would provide the overall coordinating framework for the current focused and specialized bilateral agreements among the concerned entities.
The FSF would focus on facilitating consultations and the exchange of information among its members on all matters related to the supervision and regulation of financial institutions within the constraints of existing charters and confidentiality of laws.
The SEC and the BSP earlier agreed to conduct joint examination of entities they both regulate to ensure an effective and efficient supervision of the financial sector.
Under the proposed memorandum of agreement (MOA), the SEC and BSP will conduct joint inspections of non-bank financial institutions (NBFIs) to ensure that regulatory gaps do not occur. This will be in addition to the memorandum of understanding (MOU) signed by the BSP and SEC last July, which outlines cooperative arrangements to more efficiently share supervisory responsibilities and information for those entities that fall under the jurisdiction of both agencies.
The move is expected to minimize cost of supervision and standardize the regulatory and operational reports filed with both the SEC and BSP.
The SEC and BSP have dual control over some areas and activities of investment houses. Investment houses, which are subsidiaries or affiliates of banks, are under the BSP because of their direct effect on their parent companies. The BSP has no responsibility over investment houses‚ securities regulated activities, while commercial paper registration and underwriting is left with the SEC.
Under the current system, examination of a banking group is conducted separately without any coordination by the BSP’s Supervision and Examination Department and the SEC’s Markets Regulation Department.
Based on the proposed procedures, the BSP, at the start of every year, shall furnish SEC its annual program of examination for NBFIs. Upon receipt of notification, the SEC shall within reasonable period of time inform BSP whether or not it will join the examination. Should the SEC decide not to participate in the examination, it may nonetheless request BSP to look into certain aspects of operation of the entity to be examined.
The BSP and SEC have also agreed to consult each other on their respective findings, extend technical assistance and provide information which could assist the agency exercising primary jurisdiction over the entity in assessing the risk exposure of the regulated entity and in implementing its mandate of protecting the interests of the investing public.
When a concerned agency discovers that a regulated entity violated the law, rules and regulations implemented by its counterpart agency, the concerned agency shall refer the violation to the counterpart agency for the imposition of the appropriate penalty.
The SEC was established on Oct. 26, 1936 by virtue of Commonwealth Act 83, otherwise known as the Securities Act, to curb fraud and manipulation and to prevent the exploitation of the investing public. It also serves as the registry of partnerships and corporations.