IOSCO compares prudential standards in the securities sector: In response to concerns over the lack of a uniform global standard for investment firms' capital adequacy, IOSCO has published a report comparing major capital frameworks in the securities sector. It identifies key differences across jurisdictions on the:

  • scope of what constitutes regulated business;
  • approach to capturing and calibrating risks;
  • choice of a Basel-style approach or a net capital approach, and also of different definitions and carve-outs within the approach; 
  • treatment of different types of firms;
  • use of internal models, although similar mathematical foundations may be leading to convergence; and
  • treatment of risk posed by group entities, sometimes done on a group-wide basis, sometimes on a solo basis.

IOSCO asks for comments on how the findings of the report should be reflected on an updated version of the 1989 Capital Standards Report, particularly in relation to regulatory arbitrage and use of internal models. (Source: A Comparison and Analysis of Prudential Standards in the Securities Sector