Members of the International Organization of Securities Commissions (IOSCO) met at the organization´s 44th Annual Meeting in Sydney this month to discuss priority issues facing securities market regulators and supervisors today. The meeting, which was hosted by the Australian Securities and Investments Commission (ASIC), was attended by some 350 IOSCO members.
The Annual Meeting, which took place from 13 to 15 May, included meetings of the IOSCO Board, IOSCO´s Growth and Emerging Markets (GEM) Committee, its four Regional Committees and the Affiliate Members Consultative Committee (AMCC).
The event concluded with the annual general meeting of all IOSCO members in the Presidents Committee. Participants discussed different aspects of IOSCO´s priority work, including crypto- assets, Fintech, sustainability, data privacy, market fragmentation, asset management and retail distribution and digitalization. It also discussed technical assistance and capacity building.
At
its meeting, the IOSCO Board considered next steps for these important priority
topics, which are consistent with the IOSCO workplan for 2019 that was developed
following the IOSCO Board’s decision to prioritize key issues in October 2018
and published on 25 March 2019. Below are the priority topics.
Crypto-Assets
The Board members agreed to publish a consultation report on crypto-asset trading platforms, in response to a G20 request. The work aims to assist IOSCO members in evaluating the serious investor protection challenges relating to these trading platforms.
On 6 May, IOSCO launched an Emerging Digital Threats (EDT) Portal for its members to enable sharing of enforcement-related information on emerging digital threats, including those arising from crypto-assets. IOSCO will also develop material to assist regulators in educating retail investors about crypto-assets.
Market fragmentation
The Board agreed to publish an IOSCO report on Market Fragmentation and Cross Border Regulation, in response to a G20 request, which analyzes how some financial markets may have experienced fragmentation in whole or in part due to regulation. The Board agreed to scope potential further work in this area and to continue its collaboration with the Financial Stability Board’s efforts on this matter.
Asset management
The Board discussed IOSCO´s public consultation on proposals to measure leverage in investment funds and to collect data based on the metrics it develops. The work is part of IOSCO´s follow up to the Financial Stability Board recommendations to address potential structural vulnerabilities in asset management activities.
Margin Requirements
The Board analyzed issues around the final implementation phase of the BCBS-IOSCO margin requirements for non-centrally cleared derivatives. It discussed various key issues relating to the preparedness of more counterparties coming into scope on or after 1 September 2020, when the final margin requirements go into effect.
Fintech Network
The Board discussed the work of the IOSCO Fintech network, established in May 2018 to facilitate the sharing of knowledge and experiences among IOSCO members. The Board deliberated on next steps for the four workstreams: distributed ledger technology, ethics in artificial intelligence and machine learning, Regtech and encouraging innovation. Members also discussed how IOSCO could assist emerging markets with Fintech matters.
Sustainable Finance
The Board discussed the work of the IOSCO Sustainable Finance network, created last year to focus on the role of regulators in sustainable finance and relevant international initiatives taken by other organizations. The Board noted a report on sustainable finance in emerging markets that the GEM Committee plans to publish.
Data Protection
Board members discussed next steps relating to an Administrative Arrangement (AA) regarding the European General Data Protection Regulation (GDPR), which was approved by the IOSCO Board, the Board of Supervisors of the European Securities and Markets Authority (ESMA) and the European Data Protection Board. This included providing guidance to members in determining whether to sign the AA. The AA facilitates the continued cooperation and exchange of enforcement and supervisory information under existing information sharing arrangements or memoranda, including the IOSCO Multilateral Memorandum of Understanding (MMoU) and the Enhanced-MMoU while providing safeguards for the transfer of personal data between European Economic Area (EEA) and non-EEA members.
The Board noted that numerous IOSCO members have signed the AA (currently 16) and encouraged other members to consider signing it.
Cyber Task Force.
The Board agreed to publish a Task Force report that examines how IOSCO members are applying existing cyber standards or guidance in their respective regulatory regimes and identifies potential gaps in the application of these standards that may need to be addressed.
Retail distribution and digitalization
The Board considered IOSCO´s work on retail distribution and digitalization, which examines how firms use digital distribution models with features such as online advertising and cross-border marketing to potentially avoid local rules and target vulnerable consumers with offerings of high-risk, complex financial products.
Market making and liquidity provision in equity securities
The Board agreed to examine the evolving role of market makers and other liquidity providers in securities markets, including incentives offered by trading venues regarding liquidity provision, and determine whether additional policy work is needed.
Standards implementation
The Board approved the IOSCO Assessment Committee’s workplan for 2019-2020 and proposed to conduct an IOSCO Standards Implementation Monitoring (ISIM) project on IOSCO’s Principles Relating to the Regulator.
During the annual meeting, IOSCO formally recognized new signatories to the MMoU and Enhanced MMoU. Please refer to Annex 1 for the list of new signatories.
Ashley Alder, Chair of the IOSCO Board, said: “The Annual Meeting in Sydney brought together the whole IOSCO membership of 225 member organizations to focus on IOSCO´s priority activities, as set forth in the IOSCO work program for 2019, while continuing to address risks to investor protection, market integrity and financial stability.”
James Shipton, Chair of ASIC, said: “ASIC was delighted to have hosted the 44th IOSCO Annual Meeting in Sydney. The Annual Meeting provides a unique opportunity to discuss issues of common concern and to build the strong and effective working relationships that are crucial to an effective international regulatory environment.”
Annex 1 – New Signatories to the MMoU and Enhanced MMoU
The following four members were formally recognized at the Annual Meeting for becoming signatories to the IOSCO MMoU since the last Annual Meeting in May 2018, taking the total number of signatories to 123 out of 149 eligible IOSCO members:
• Algeria: Commission d’ Organisation et de Surveillance des Opérations de Bourse
• Cabo Verde: Auditoria Geral do Mercado de Valores Mobiliários
• Chile: Commission for the Financial Markets (Comisión para el Mercado Financiero)
• Iran: Securities and Exchange Organization
Another six members were recognized in Sydney as signatories to the Enhanced Multilateral Memorandum of Understanding (EMMoU), bringing to 11 the total number of members who have signed the EMMoU. The EMMoU was introduced in 2017 to expand the range of enforcement powers that signatories may use to safeguard the integrity and stability of markets, protect investors and deter misconduct and fraud. These powers were introduced in light of the new enforcement challenges created by growing cross-border activity and technological developments in securities markets. The new signatories are:
• The Bahamas: Securities Commission of The Bahamas
• Canada, Ontario: Ontario Securities Commission
• Canada, Quebec: Autorité des marchés financiers
• Korea: Financial Services Commission/Financial Supervisory Service
• United States of America: Commodities Futures Trading Commission
United States of America: Securities and Exchange Commission
