
The International Organisation for Securities Commissions (IOSCO), the global standard setter for securities market regulators, on 14 December 2023 published its Consultation Report on Market Outages.
Operational resilience remains a key global priority for securities regulators, as the resilience of trading venues is vital for the smooth operation of global capital markets.
Recent market outages have shown that trading venues can take different approaches regarding the coordination and communication of recovery pathways for the impacted market participants and the general public.
Building from previous IOSCO reports and new information gathered through a members’ survey, this Consultation Report identifies key findings from recent market outages and puts forward five good practices for trading venues to consider improving market-wide resilience during an outage:
- Establish and publish an outage plan with clearly defined roles and responsibilities;
- Implement a communication plan, which provides, through an appropriate communication channel, initial notice (as soon as possible) of the outage, and, thereafter, with regular updates on the status of the outage and the recovery pathway;
- Communicate information relevant to the reopening of trading in a timely and simultaneous manner to all market participants, providing clarity on the status of their orders and ensuring they receive an adequate period of notice before the resumption of trading;
- Ensure the processes and procedures that trading venues will follow to operate a closing auction and/or to establish alternative closing prices are published in the outage plan and communicated to all market participants during an outage; and
- Conduct and share with the relevant regulators a lessons-learnt exercise of the market outage and adopt a post-outage plan, with clearly defined timelines and allocation of responsibilities for remediation, designed to reduce the likelihood of future incidents and to improve the ability of the trading venue to effectively respond to outages.
These good practices aim to assist regulators, trading venues and market participants in preparing for, and managing, future market outages and thereby helping improve market-wide resilience.
While the Consultation Report focuses on equities listing trading venues, the findings are also relevant to other trading venues, including non-listing trading venues and derivatives trading venues.
Isadora Tarola, Chair of the IOSCO Committee on Regulation of Secondary Markets (Committee 2), said:
“Market outages – particularly if they occur on a listing trading venue – can be highly disruptive. The proposed set of good practices are an important step towards enhancing market-wide resilience in the event of a market outage. We strongly encourage market participants to actively participate in the consultation process.”
Comments on the Consultation Report should be sent to marketoutages-consultation@iosco.org on or before 15 March 2024.