Measuring Jamaica Against IOSCO: A Principles-Based Diagnostic of the Jamaican Capital Market

 

 Why the IOSCO Principles matter

The International Organization of Securities Commissions is the global standard-setter for securities regulation. Its membership comprises the securities regulators of more than 130 jurisdictions, collectively responsible for over 95 per cent of the world’s securities markets. The IOSCO Objectives and Principles of Securities Regulation, first published in 1998 and most recently revised in 2017, set out the standards that every credible securities regulator is expected to meet. The IMF and World Bank apply the IOSCO Principles in Financial Sector Assessment Programs. Sovereign credit rating agencies reference IOSCO compliance in their assessments of jurisdictional regulatory quality. International institutional investors apply IOSCO compliance as a screening criterion for emerging-market exposure. Cross-border listings, regulatory equivalence determinations, and the operation of the IOSCO Multilateral Memorandum of Understanding for cross-border enforcement cooperation all turn on assessed compliance with the Principles.

For Jamaica, the IOSCO Principles are not abstract international guidance. The Financial Services Commission has been an Ordinary Member of IOSCO since 2002 and is signed up to the IOSCO MMoU. Jamaica’s compliance with the IOSCO Principles is, in operational terms, the international yardstick by which the Jamaican capital market is measured. The Twin Peaks transition presents an opportunity to upgrade Jamaica’s compliance from its current position to a position closer to the international leading edge. Whether that opportunity is taken depends on whether the legislative drafting work currently underway is informed by a precise diagnostic of where current arrangements fall short.

This article provides that diagnostic. It does not assess every one of the 38 Principles in detail — that would require a document longer than a Caribbean Boardroom Perspectives article — but it identifies the categories of Principle where Jamaica’s current arrangements are most clearly compliant, the categories where compliance is partial, and the categories where the Twin Peaks transition needs to deliver substantive upgrade. The conclusions are the input the legislative drafters and the new regulators will need.

The 38 Principles, organised across ten categories

The IOSCO Principles are organised into ten thematic categories. Principles 1 through 5 cover the regulator itself — its powers, its independence, its accountability, its resourcing, its enforcement record. Principles 6 and 7 cover self-regulation — the framework under which SROs like the JSE operate. Principles 8 through 10 cover enforcement — the regulator’s investigative powers, supervisory tools, and ability to act against breaches. Principles 11 through 14 cover cooperation — the regulator’s ability to share information, work with overseas counterparts, and operate effectively under the IOSCO MMoU. Principles 15 through 18 cover issuers — the disclosure obligations, governance arrangements and shareholder protections required of listed companies. Principles 19 through 23 cover the supervision of auditors, accounting standards, and audit firm independence. Principles 24 through 28 cover collective investment schemes — the licensing, governance and operational requirements for fund managers and the funds they manage. Principles 29 through 32 cover market intermediaries — the licensing, capital, conduct and supervisory regimes for broker-dealers, investment advisers, and similar firms. Principles 33 through 37 cover secondary markets — the operation of stock exchanges, market integrity, market surveillance, and protection against market abuse. Principle 38 covers clearing and settlement infrastructure — the systems that complete securities transactions.

Each of these categories deserves attention in any complete diagnostic. For the purposes of this article, four categories are particularly important because they are where the gap between current Jamaican arrangements and the IOSCO standard is most consequential and where the Twin Peaks transition has the most direct impact: the regulator (Principles 1–5), enforcement (Principles 8–10), market intermediaries (Principles 29–32), and secondary markets (Principles 33–37). The remaining categories also matter and deserve their own structured assessment, but these four are the load-bearing categories for a Twin Peaks regime that aims at international credibility.

Principles 1–5: The Regulator

The first five Principles set out the foundational requirements for a credible securities regulator. The regulator’s responsibilities should be clear and objectively stated (Principle 1). The regulator should be operationally independent and accountable in the exercise of its functions and powers (Principle 2). The regulator should have adequate powers, proper resources and the capacity to perform its functions and exercise its powers (Principle 3). The regulator should adopt clear and consistent regulatory processes (Principle 4). The staff of the regulator should observe the highest professional standards including appropriate standards of confidentiality (Principle 5).

Jamaica’s current arrangements are partially compliant. Principle 1 is largely met — the FSC’s mandate is set out in the Financial Services Commission Act and supplementary legislation. Principle 5 is met in operational terms. The gaps are concentrated in Principles 2, 3 and 4. On independence, the FSC’s funding model and senior appointment arrangements are not at the leading edge of international practice; in mature jurisdictions the conduct regulator’s budget is ring-fenced from political interference and senior appointments are subject to parliamentary scrutiny. On powers and resources, the existing FSC has been chronically under-resourced relative to the scope of its mandate, and supervisory data infrastructure is materially weaker than international comparators. On clear and consistent processes, the FSC’s supervisory rulebook is less consolidated and less publicly accessible than the rulebooks of comparable jurisdictions.

The Twin Peaks transition addresses these gaps directly if the legislative design is right. The new conduct FSC should have a statutorily protected funding model, transparent senior appointment processes, expanded statutory powers calibrated to international benchmarks, expanded specialist headcount across market supervision and enforcement, and a consolidated rulebook published on the regulator’s website with clear amendment procedures. None of these reforms is automatic — each requires deliberate legislative and operational design. The question is whether the legislative drafting work currently underway will produce these upgrades or whether they will be deferred to subsequent regulations and, in some cases, to subsequent legislative amendments.

Principles 8–10: Enforcement

The enforcement Principles are the operational test of every securities regulator. Principle 8 requires the regulator to have comprehensive inspection, investigation and surveillance powers. Principle 9 requires the regulator to have comprehensive enforcement powers. Principle 10 requires the regulatory system to ensure effective and credible use of inspection, investigation, surveillance and enforcement powers and the implementation of an effective compliance programme.

Jamaica’s current arrangements are partially compliant on Principles 8 and 9 and substantially below international leading practice on Principle 10. The investigative powers are real but narrower than in mature jurisdictions; production order powers, witness compulsion powers, and the ability to compel cooperation from regulated firms during investigations are not as comprehensive as the IOSCO standard. The civil penalty calibration is materially below international benchmarks; the maximum civil penalties under the existing framework would be considered inadequate by FCA, ASIC, FSCA or AFM standards. The enforcement track record, while building, has not reached the level of operational frequency, gravity, or public visibility that establishes credible deterrence in the regulated community. The Hayne Royal Commission analogue — a public assessment of the regulator’s enforcement record by a credible independent reviewer — has not occurred in Jamaica, and the absence of that public assessment makes self-correcting institutional development harder.

The Twin Peaks transition is the natural occasion to upgrade enforcement powers and calibration to the IOSCO standard. The Minister of Finance has explicitly noted that current laws do not provide BOJ or FSC with legal authority to enforce consumer-protection service-level standards through fines, and that the gap will be addressed in the future legislation. The drafting question is whether the calibration will be calibrated to international benchmarks — the FCA’s £15 million-plus penalty range for serious institutional misconduct, ASIC’s tens-of-millions of Australian dollars penalty range, the FSCA’s similarly calibrated penalty regime — or whether it will settle at a level that signals seriousness without producing actual deterrence. This is the single most consequential drafting question in the entire Twin Peaks legislative package.

Principles 29–32: Market Intermediaries

The market intermediary Principles cover the regulation of broker-dealers, investment advisers, and similar firms. Principle 29 requires regulation that provides for minimum entry standards. Principle 30 requires initial and ongoing capital and other prudential requirements. Principle 31 requires market intermediaries to be required to comply with standards for internal organisation and operational conduct that aim to protect the interests of clients, ensure proper management of risk, and provide for management’s responsibility for matters under its control. Principle 32 requires that there be procedures for dealing with the failure of a market intermediary.

Jamaica’s current arrangements are partially compliant on Principles 29 and 30 but materially below the IOSCO standard on Principles 31 and 32. The licensing and capital requirements for securities dealers are real but the capital adequacy framework is less granular than international standards and is not publicly disclosed in the form that mature jurisdictions require. The internal organisation and operational conduct requirements — the substantive client asset segregation, custody, reconciliation and reporting requirements — are at the heart of the SSL diagnosis covered in Article 2 of this series, and the gap to international standards is material. The market intermediary failure procedures — the equivalent of the resolution regime that operates in Australia, the UK and other jurisdictions — are weaker than international benchmarks. SSL, in operational terms, is being managed under the existing regulatory architecture, not under a comprehensive resolution regime.

The Twin Peaks transition needs to deliver upgrades on each of these dimensions. Capital adequacy reporting should be expanded and publicly disclosed at the level of detail expected by international standards. Client asset segregation, custody, reconciliation and reporting should be reformed comprehensively, with independent custody requirements, mandatory daily or weekly reconciliation by an independent party, public reporting of client asset balances, and direct rights of action for clients in the event of insolvency. The market intermediary failure regime should be developed in parallel with the Special Resolution Regime referenced in Article 1, and the two should interlock so that a failing securities dealer can be resolved without creating the kind of accumulating client harm that SSL produced.

Principles 33–37: Secondary Markets

The secondary market Principles cover the operation of stock exchanges and the supervision of market integrity. Principle 33 requires the establishment of trading systems including securities exchanges to be subject to regulatory authorisation and oversight. Principle 34 requires there to be ongoing regulatory supervision of exchanges and trading systems. Principle 35 requires regulation to promote transparency of trading. Principle 36 requires regulation to be designed to detect and deter manipulation and other unfair trading practices. Principle 37 requires regulation to aim to ensure the proper management of large exposures, default risk and market disruption.

Jamaica’s current arrangements are partially compliant. The JSE is authorised and supervised under the existing Securities Act, and the basic regulatory framework for trading is in place. The pre-trade and post-trade transparency arrangements meet the basic IOSCO expectations. The market manipulation framework exists but is less comprehensive than international standards, and the enforcement record on market abuse cases is less developed than in larger jurisdictions. The market disruption and large exposure framework is partially in place but is not as fully developed as the IOSCO standard expects.

The most consequential gap in this category, however, is the structural one identified in Article 7 of this series. The JSE operates as a self-regulatory organisation with substantial regulatory functions while simultaneously operating as a publicly listed for-profit company. The IOSCO Principles for SROs require independence, governance arrangements that prevent commercial considerations from influencing regulatory decisions, and accountability to the supervising regulator. Whether Jamaica’s current arrangements meet these standards is a structural question that the Twin Peaks transition makes unavoidable. The four questions identified in Article 7 — market surveillance, listing rule administration, SRO oversight regime, and JSE commercial governance — are, in IOSCO terms, the questions that determine compliance with Principles 6, 7 and 33–36. The architectural choices Jamaica makes on these questions will determine whether the post-cutover regime is rated as compliant, partially compliant, or non-compliant on this category in future IOSCO assessments.

The categories not examined here, and why they matter

This article has focused on four categories where the Twin Peaks transition has the most direct impact and where the gap between current arrangements and the IOSCO standard is most consequential. Six other categories deserve their own assessment in due course — cooperation (Principles 11–14), issuers (Principles 15–18), auditors and accounting (Principles 19–23), collective investment schemes (Principles 24–28), and clearing and settlement (Principle 38), plus the SRO Principles (6–7) which interlock with the secondary market category.

On cooperation, Jamaica’s IOSCO MMoU signatory status is the foundation, but the operational cadence of cross-border cooperation requests, information-sharing gateways with overseas regulators, and the international cooperation team within the FSC will need attention as part of the new regime. On issuers, the listing rule reform programme that the JSE and the FSC initiated in late 2024 is the natural vehicle for upgrading continuous disclosure, governance and shareholder protection requirements toward international standards. On auditors and accounting, the parallel work of the Public Accountancy Board and the audit profession’s own self-regulation will need to be coordinated with the FSC’s supervisory expectations on listed issuer audits. On collective investment schemes, the existing framework is in better shape than some other categories but still has gaps relative to leading-edge regimes. On clearing and settlement, the Jamaica Central Securities Depository operates a framework that is broadly compliant with international standards but should be reviewed against the CPMI-IOSCO Principles for Financial Market Infrastructures as part of the Twin Peaks transition.

The point is that the IOSCO Principles diagnostic is not optional, not partial, and not deferrable to a post-cutover review. It is the work that should be done now, in 2026, in parallel with the legislative drafting. A Twin Peaks regime that emerges from the cutover with known IOSCO non-compliance gaps in identifiable categories will require its own subsequent reform programme to address those gaps. A Twin Peaks regime that emerges with a clean IOSCO compliance assessment will be positioned to compete for international capital, attract regional listings, and operate effectively under the IOSCO MMoU from the first day of operation. The choice between these two outcomes is being made now.

What this means for the legislative drafting work

The legislative drafting work currently underway at the Ministry of Finance, the Bank of Jamaica and the FSC has been described publicly as approximately 95 per cent ready for submission. The remaining 5 per cent is the part where the IOSCO compliance question is most acute. Three drafting choices in particular deserve attention from the IOSCO compliance perspective.

The first is on penalty calibration. The maximum civil penalties in the new legislation should be calibrated to international benchmarks — meaning hundreds of millions of Jamaican dollars at the maximum end for serious institutional misconduct, with clear multipliers for repeat offences, and with corporate-versus-individual structures that align with the FCA, ASIC, FSCA and AFM regimes. Anything less is a known IOSCO compliance gap from the moment the legislation enters into force.

The second is on individual accountability. The Senior Managers and Certification Regime equivalents covered in Article 5 are not strictly required by the IOSCO Principles in their current form, but the international direction of travel is unambiguous, and the IOSCO Principles will likely be revised to reference individual accountability regimes within the next decade. Jamaica’s choice to include or exclude SMCR-equivalent provisions in the 2026 legislation will determine whether the country leads or follows on this dimension.

The third is on consumer redress. The Compensation Scheme of Last Resort referenced in the Australian context (Article 4), the Australian Financial Complaints Authority, and the Financial Ombudsman Service in the UK are consumer redress instruments that go beyond the strict IOSCO Principles but are consistent with the direction of regulatory travel internationally. Whether Jamaica’s Twin Peaks regime includes equivalents from the start, or adds them later, will determine the credibility of the consumer protection narrative around the new regime.

What boards and senior management should take from the diagnostic

Three operational implications follow from this principles-based diagnostic for boards and senior management of Caribbean financial institutions, regardless of whether they are in the capital market sector specifically.

The first is on benchmarking. The IOSCO Principles are publicly available, well-documented, and routinely applied to assess regulatory quality. Boards that benchmark their institution’s governance, conduct, capital and operational arrangements against the standards that comply with the IOSCO Principles in mature jurisdictions are operating to the right benchmark. Boards that benchmark only against current Caribbean baseline practice are benchmarking to a standard the regulatory environment is leaving behind. The Twin Peaks transition will progressively converge Caribbean institutional expectations with international benchmarks, and the institutions that begin the convergence work in 2026 will face a more comfortable post-cutover environment than those that wait.

The second is on data infrastructure. The IOSCO compliance work that the new conduct FSC will undertake post-cutover will generate supervisory data requests at granularities and frequencies that are materially higher than those the existing FSC currently issues. Boards that have already commissioned the data infrastructure work — supervisory-grade reporting on capital, on conduct, on customer outcomes, on complaints, on vulnerable customer treatment, on related-party transactions, on beneficial ownership — will be able to respond to supervisory requests as they arrive. Boards that have not done this work will be building the infrastructure under enforcement pressure, which is a materially worse position to be in.

The third is on engagement strategy. The new conduct FSC, post-cutover, will be operating to international standards from the start. Institutions that engage transparently, technically and constructively with the new regulator on IOSCO compliance dimensions will build supervisory relationships that compound over the institutional development period. Institutions that treat the new regulator as the same FSC under a different name, with the same supervisory expectations and the same engagement standards, will discover that the standard has changed.

Closing the diagnostic, and what comes next

The IOSCO Principles diagnostic is the technical core of Act III of this series. Article 7 examined the structural questions about the JSE that the Twin Peaks transition makes unavoidable. This article has examined the international benchmark — the IOSCO Principles — against which the post-cutover regime will be measured, and identified the categories where Jamaica’s current arrangements fall short of that benchmark. Article 9 closes Act III by examining investor protection in a Twin Peaks world — the consumer redress mechanisms, complaints authorities, compensation arrangements and outcomes-based supervisory tools that the international evidence base has demonstrated to be necessary supplements to architectural reform.

Together, the three articles of Act III translate the international evidence base assembled in Act II into a concrete diagnostic and prescription for the Jamaican capital market under Twin Peaks. The structural questions are unavoidable. The international benchmarks are clear. The supplementary instruments — penalty calibration, individual accountability regimes, consumer redress mechanisms, supervisory data infrastructure — are all required if the Twin Peaks regime is to deliver the credibility that the architecture promises. Act IV of this series, beginning with Article 10, takes this analysis forward to the recommendations and the boardroom readiness work that the run-up to the cutover requires.

 

PARTNER WITH DAWGEN GLOBAL From IOSCO Diagnostic to Operational Readiness The IOSCO Principles are the international benchmark against which the post-Twin Peaks Jamaican capital market regime will be measured. The institutions that benchmark their governance, conduct, capital and operational arrangements against the international standard now will be positioned for the supervisory engagement the new regime will require. Dawgen Global brings audit, assurance and capital market regulatory advisory expertise to translate the IOSCO Principles diagnostic into operational readiness programmes for boards, senior management and control functions — Big Firm capabilities, with Caribbean understanding. Six advisory engagements designed for this moment: ▸  IOSCO Principles Compliance Assessment — independent benchmarking of an institution’s governance, conduct, capital and operational arrangements against the IOSCO Principles, with prioritised remediation roadmap aligned to the Twin Peaks legislative timetable. ▸  Penalty Risk Modelling — quantitative modelling of potential civil money penalty exposure under the post-Twin Peaks calibration, identifying the conduct, disclosure and operational practices most likely to trigger material penalties. ▸  Capital Adequacy & Public Disclosure Readiness — for securities dealers, comprehensive review of capital adequacy reporting against international benchmarks expected to feature in post-cutover prudential supervision. ▸  Client Asset Custody & Segregation Independent Review — independent examination of client money, securities custody, segregation arrangements, reconciliation processes and insolvency-scenario rights of action against post-SSL benchmarks. ▸  Cross-Border Cooperation Readiness — for institutions with regional or international exposure, review of MMoU-related operational protocols, information-sharing arrangements and supervisory cooperation frameworks. ▸  Supervisory Data Infrastructure Programme — design and implementation of supervisory-grade reporting systems for capital, conduct, customer outcomes, complaints, vulnerable customer treatment, related-party transactions and beneficial ownership. Begin the conversation today. Email: [email protected]

COMING NEXT IN THIS SERIES

Article 9  —  Investor Protection in a Twin Peaks World: From Disclosure to Outcomes

The international evidence base assembled in Act II demonstrated that consumer redress mechanisms, complaints authorities, compensation arrangements and outcomes-based supervisory tools are necessary supplements to Twin Peaks architecture. The next article closes Act III by examining what investor protection should look like in the post-cutover Jamaican capital market — and why the shift from disclosure-based to outcomes-based supervision is the most consequential single supervisory shift the Caribbean financial sector will experience this decade.

ABOUT THE AUTHOR

Dr. Dawkins Brown is the Executive Chairman and Founder of Dawgen Global, an independent, integrated multidisciplinary professional services firm headquartered in New Kingston, Jamaica, operating across more than fifteen Caribbean territories. With Big Four heritage and over twenty-three years of professional experience, Dr. Brown writes regularly on Caribbean financial regulation, capital markets, governance and strategy through the LinkedIn newsletter Caribbean Boardroom Perspectives.