7. The Task Force studied fourteen conglomerates which are diverse in their business activities, the extent of their international reach and in the complexities of their organisational structures. The Task Force has reviewed and refined the questionnaire that participants in the mapping exercise used to compile information. The Conglomerate Questionnaire which consists of a users guide, a glossary of terms, the questionnaire itself and the matrix form for recording findings is attached as Annex A.

8. The Task Force also collected detailed information on supervisory objectives and approaches and on the authority of supervisors to share information in the countries represented in the Joint Forum. This information, which was collected through the completion of a Supervisory Questionnaire and recorded in a matrix format, has been shared amongst the supervisory agencies represented on the Joint Forum and provides a solid foundation to assist supervisors in each sector to better understand colleagues' responsibilities and their modus operandi.

9. Financial conglomerates take a wide variety of structures. Conglomerates may have a large number of legal entities, primarily as a result of historical, tax and regulatory considerations. Some conglomerates indicated a desire to simplify their business lines and legal entity structures by bringing them together, but viewed regulatory, fiscal and legal impediments as obstacles.

10. The Task Force examined the different structures of the conglomerates mapped to assess the implications of those structures on supervision and on the sharing of supervisory information between supervisors.

11. There are two key dimensions which tend to have particular implications for the supervision of regulated entities within financial conglomerates namely, 1) the organisation of business activities along business lines versus along the corporate legal structure and 2) the organisation of corporate control functions on a global or centralised basis versus on a local basis. The focus of the Task Force in classifying financial conglomerates into quadrants is based on these two key dimensions.

12. The findings of the exercise carried out with respect to the fourteen conglomerates mapped are plotted into the following chart using a quadrant categorisation. The X axis relates to the organisation of the conglomerate's controls, with local controls at one end and global controls at the other. The Y axis relates to the organisation of the management structure, along business lines at one pole and legal entity structure at the other.

Graphic 1

13. The positioning of conglomerates within the particular quadrants, or bridging quadrants, does not result from a mathematical exercise. Rather, the position of individual conglomerates reflects the judgement of the Task Force members in the mapping exercise, based on an assessment of information collected during the exercise.

14. The proportion of conglomerates, whether primarily banking, securities or insurance or mixed, falling into a particular quadrant is strictly a function of the particular sample of conglomerates participating in the mapping exercise. Choosing a different sample of conglomerates could result in a different proportion of conglomerates falling in one or the other quadrant.

15. Given the dynamic nature of diversified financial groups, the categorisation of a conglomerate in a particular quadrant is a determination at a point in time. The structure of business activities and of corporate control functions can shift over time, sometimes rather quickly, and the categorisation would need to be reviewed through the supervisory process.