Latin American Capital Markets

372 A. M. CORCORAN, R B. HOBSON, G.J. KUSERK, K. K.WUERTZ.AND QWEST• Ability to cooperate with other authorities to carry out supervisory responsibilities.51Surveillance helps maintain an appropriately functioning market and, therefore,contributes not only to market integrity and customer protection but also tomarket success.EnforcementIOSCO (2002b) notes, "The complex character of securities transactions and thesophistication of fraudulent schemes require strong and rigorous enforcement ofsecurities laws. The case can be made a fortiori for derivatives markets where customersof the markets may be vulnerable to misconduct by intermediaries and othersif unsophisticated or to failures of integrity that can adversely affect the market'sintended use. Policymakers should assure that the regulator or other competent governmentauthority is provided with comprehensive investigative and enforcementpowers including:• Regulatory and investigative powers to obtain data, information, documentsstatements, and records from persons involved in the relevant conduct orwho may have information relevant to the inquiry• Power to seek orders and/or take other action to ensure compliance withthose regulatory, administrative, and investigation powers• Power to impose administrative sanctions and/or seek orders from courts ortribunals• Power to initiate or to refer matters for criminal prosecution• Power to order the suspension of trading in securities or to take other appropriateaction and• Where enforcement action is able to be taken, the power to enter into enforceablesettlements and to accept binding undertakings." 525 ' The detailed articulation of this surveillance guidance includes specific types of information that should be accessibleand can be used by designers of regulatory systems in ensuring that market authorities have relevant supervisorypowers. Although this list was developed primarily for physical delivery markets of finite supply, its tenets were citedby IOSCO in 1998 as a menu to be consulted in overseeing financial derivatives markets.52 IOSCO (1998) Principle 8. Enforcement of Securities Regulation, pp. 15-16.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub