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The official Financial Regulation Journal of SAIFM

IOSCO consults on revised Principles for the regulation and supervision of commodity derivatives markets to reflect recent market developments

The Board of the International Organization of Securities Commissions (IOSCO) is requesting feedback on proposed revisions to its 2011 Principles for the Regulation and Supervision of the Commodity Derivatives Markets.

The revised Principles seek to ensure that commodity derivatives markets continue to facilitate price discovery and hedging, while remaining free from manipulation and abusive practices. The Principles will assist relevant Market Authorities in constructing an appropriate regulatory and supervisory approach that furthers these objectives and fosters proper conduct in commodity derivatives markets. 

IOSCO published the original Principles in September 2011, in response to a G20 request for further work on regulation and supervision of the commodity derivatives markets, due to continued volatility and price pressure on certain commodities. While the Principles reflected the characteristics of the markets at that time, these markets have continued to evolve over the last decade. New trends arising from the regulatory reforms, the growing reliance on electronic trading and data, emerging new technologies and products, and unexpected disruptions beyond market dynamics, among other developments, have influenced how commodity derivatives markets and price formation in these markets have evolved in this period.

Accordingly, IOSCO conducted a review of the recent developments and their impact on the commodity derivatives markets. It updated the 2011 IOSCO Principles to help ensure these developments are appropriately addressed and the Principles continue to provide a resilient framework for the regulation and oversight of commodity derivatives markets.

IOSCO also considered the importance of mitigating the impact of unexpected disruptive external events, such as spikes in oil prices or the COVID-19 pandemic, on commodity derivatives markets and how the Principles might help address such events.

For this consultation, IOSCO is asking market participants the following questions:

Consultation Questions:

Do you think the revised Principles reflect appropriately the changes, trends and activities in the commodity derivatives markets over the last decade since the publication of the original Principles in 2011? Are there any areas that are missing and/or merit IOSCO consideration? Do the Principles continue to serve as a sound framework for the regulation of the commodity derivatives markets?

Please submit comments to on or before 17 January 2022.

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