Thu, Jun 13, 2024

The official Financial Regulation Journal of SAIFM

IOSCO reprioritizes its work program to address impact of COVID-19

The Board of the International Organization of Securities Commissions (IOSCO) has agreed to pause or delay some of its work in 2020 in order to redirect its resources to focus on the multiple challenges securities markets regulators are addressing as a result of the COVID-19 crisis. 

This decision means that the work priorities outlined in IOSCO´s 2020 annual work program needed to be reconsidered. In deciding on which priorities to pause or delay, the Board was guided by four overarching principles:

1.     A recognition that a delay would relieve untoward pressure on IOSCO members who are addressing core crisis challenges;

2.     A recognition that operational constraints on financial institutions would likely impede their ability to contribute to IOSCO projects and/or follow up on final reports;

3.     A recognition that in many cases it may be inappropriate to issue reports during this crisis given that they may become wholly or partly overtaken by events and/or they would need to be modified to take account of lessons learned or factor in a substantially changed financial landscape as a result of the crisis; and

4.     A recognition that IOSCO, the Financial Stability Board and other Standard Setting Bodies with whom IOSCO collaborates are focusing substantial efforts (which is resource intensive) to address the crisis which is now the priority. 

In view of these principles, the Board agreed to redeploy resources to focus primarily on matters that are directly impacted by COVID-19.  Among other things, substantial resources are being devoted to addressing areas of market-based finance which are most exposed to heightened volatility, constrained liquidity and the potential for pro-cyclicality. These efforts include examining investment funds, as well as margin and other risk management aspects of central clearing for financial derivatives and other securities.  A limited number of other work streams that are close to completion will continue, as will work related to G-20 deliverables.  The timelines for the projects in relation to asset management linked to FSB recommendations will be coordinated with the FSB.

The work being delayed or paused includes IOSCO’s analysis of the use of Artificial Intelligence and Machine Learning by market intermediaries and asset managers, the impact of the growth of passive investing and potential conduct-related issues in index provision, issues around market data, outsourcing and implementation monitoring – all of which would have involved outreach to the industry and supervisors. However, IOSCO will continue to proceed with its work on good practices for deference, as well as other projects that are near completion which will not burden limited regulatory or industry resources. IOSCO will also examine any specific investor protection issues, market integrity or conduct risks that may arise in the context of the COVID – 19 crisis.

This reprioritization confirms IOSCO´s ongoing commitment to protect investors, maintain fair, efficient and transparent markets and mitigate systemic risks.  

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