Securities Activity on the Internet
These reports (issued in October 2003, June 2001 and September 1998) examine and provide guidance on issues relating to the impact of the Internet on securities regulation. They identify those Internet issues that should be addressed by each jurisdiction and provide guidelines on how to approach those issues. It is not the role of IOSCO, however, to provide legal interpretations or set universal standards with respect to the use of the Internet by the financial service industry. These issues must be determined under the domestic statutory schemes of each jurisdiction. The discussion of the appropriate securities regulatory framework for the Internet, as with any new medium, begins with an examination of the principles of securities regulation. Against this background, regulators should consider the following principles when formulating policies regarding specific securities activities on the Internet:
The fundamental principles of securities regulation do not change based on the medium:
- consistent with the fundamental principles of securities regulation, regulators should not unnecessarily impede the legitimate use of the Internet by market participants and markets;
- regulators should strive for transparency and consistency regarding how their regulations apply in an Internet environment;
- regulators should cooperate and share information to monitor and police securities activity on the Internet effectively; and
- regulators should recognize that electronic media and the use of such media is likely to evolve.
The key principles guide recommendations in the following areas:
- application of domestic regulatory requirements to securities activities on the internet;
- offers and advertisements;
- delivery of disclosure documents and other information;
- voting in meetings;
- communications and customer orders;
- exercise of regulatory authority over cross-border securities activities on the internet;
- use of the internet to foster investor education and transparency; and
- use of the internet to enhance cooperation in enforcement matters.
The 1998 report is divided into four parts and an annex. Part I describes the general characteristics of the Internet, specifically those characteristics that distinguish it from traditional methods of communication. Part II examines the current uses of the Internet by market participants and markets and, where relevant, describes the regulatory concerns posed by those uses. Part III reviews the current regulatory responses to these issues. In addition, the current Internet use by securities regulators is described. Part IV specifically addresses the key principles mentioned above and sets forth recommendations and guidelines for securities regulators. The annex contains a list of significant Internet-related statements of certain jurisdictions and uniform resource locators where the full text of these statements may be obtained. IOSCO jurisdictions are encouraged to contribute to the annex and update it upon publication of notable Internet-related statements.