|Principles Concerning the Regulator (P1 to P5)|
Increased staffing resources are urgently needed.
Training of staff should be a priority; consider working with other jurisdictions
The FSA mandate should be clearer in law.
|Staff in banking and securities supervision increased substantially.|
New staff hired with direct experience of industries regulated; additional training of staff undertaken; several more years experience in supervision for staff since last review.
The FMA Act clearly sets out, in one place, the overall mandate of the regulator.
|The FSA should have authority to grant, refuse, and withdraw licenses for banks, investment undertakings, and asset managers.|
Criteria for selection and dismissal of the FSA head should be set out in a manner that is transparent and legally binding on the government.
|The FMA, via amendments to the relevant banking and investment undertakings laws and the introduction of the Asset Management Act, has express authority to grant, refuse, and withdraw licenses for banks, investment undertakings, and asset managers.|
The FMA Act sets out objective criteria for the selection and termination of Board members of the FMA and for general management, including the CEO; Board members are selected by parliament; general management is selected by the Board.
|Greater transparency through a website should be introduced.|
The FSA should have the authority to make legally binding rules.
|The FMA website contains the annual report, all laws, ordinances and guidelines, a complete list of all authorized firms, checklists for applicants and other useful information. Many of these documents are also available in English. The FMA Act gives the FMA express authority to make legally binding rules.|
|Principles for the Enforcement of Securities Regulation (P8 to P10)|
FSA should have the ability to withdraw licenses and levy fines.
FSA should have authority to inspect and supervise trustees.
|The FMA has the full authority to withdraw or condition licenses, levy fines, and take other enforcement actions against banks, investment undertakings and asset managers.|
The new Asset Management Act requires asset managers to be licensed as such by the FMA and gives the FMA the authority to license, inspect, and take enforcement action against these entities. Trustees no longer may carry on asset management activities in a firm licensed as a trustee
|Principles for Cooperation in Regulation (P11 to P13)|
The FSA should adopt new policies and procedures to implement their authority to share client account information.
FSA should enter into information sharing arrangements with key counterparts, specifically the Swiss.
|The Banking, Investment Undertakings and Asset Management Acts contain express provisions setting out the authority of the FMA to share information with others.|
Information- sharing agreements are under discussion with the Swiss Banking Commission and with the Austrian Financial Market Authority.
|Principles for Collective Investment Schemes (P17 to P20)|
FSA should develop more detailed net-asset-valuation rules.
FSA should develop conflicts of interest rules for investment undertakings.
FSA should consider more detailed rules for duties of custodians.
FSA requires more resources/more experienced staff for review of audits and prospectuses.
|Improvements to net asset value rules and the valuation rules that apply to illiquid securities are in the planning stages.|
A Code of Conduct has been developed and implemented for investment undertakings. The implementation of MiFID will supplement the Code. These should be final by the end of the year.
Additional guidance for custodians was introduced as part of the implementation of the UCITS III Directive.
Additional staff with enhanced experience are available for review of audit reports and disclosure documents. Detailed review and follow-up is performed for all audit reports of investment funds and their managers.
|Principles for Market Intermediaries (P21 to P24)|
Asset managers organized as trustees should be subject to a separate licensing procedure, which sets terms of their ability to carry out asset management business and makes this transparent to the public.
|The new Asset Management Act requires asset managers to be licensed as such by the FMA and gives the FMA the authority to license, inspect, and take enforcement action against these entities. Trustees no longer may carry on asset management activities in a firm licensed as a trustee.|
|FSA should have licensing-, supervision-, and rule-making authority regarding asset managers.|
Asset managers should be subject to an annual FSA audit.
|See above. The FMA may make binding rules regarding asset management.|
Asset managers are subject to both financial and regulatory audits, as are banks and investment undertakings. Both sets of audits are performed by FMA- licensed auditors using the dual system of supervision. The intention of the FMA is to do some direct on-site reviews in future, either alone or accompanying the external auditor.
|FSA should develop more detailed rules regarding sales and business conduct of market intermediaries.||The implementation of MiFID entails the imposition of extensive investor protection requirements on banks and asset managers. The laws on banking and asset management already include certain statutory disclosure and other requirements consistent with MiFID. Additional guidance will be introduced before full implementation in November 2007.|