Madrid, 22 February 2016
IOSCO plays key role in responding to global securities markets’ challenges
The Board of the International Organization of Securities Commissions (IOSCO) met for two days in Madrid to discuss and respond to the many ongoing and emerging challenges facing global securities markets.
‘The meeting again underscored IOSCO’s role as the key reference point for global securities regulation, through our work firstly in identifying and responding to emerging risks, secondly in assisting our members in building capacity and co-operating to develop, supervise and enforce laws and thirdly acting as an advocate for the collective interest of our members,’ said Board Chairman Greg Medcraft.
‘These are exciting and challenging times for securities regulators – and IOSCO is playing a key role in responding,’ he added.
On identifying and responding to emerging risks, the meeting last week was preceded, firstly, by Round Tables discussing recent market developments and volatility in world capital markets and, secondly, the challenges and opportunities posed by fintech and – more particularly – distributed ledger technology – or block chain.
On recent market developments, Board members discussed the implications for global securities markets of slowing economic growth, declining commodity prices, continuing low or negative interest rates and market volatility. Members recognized the need to carefully monitor developments and continue to build resilience to ensure the markets they regulate will continue to be a sustainable source of finance to support economic recovery.
The roundtable discussion with leading market analysts on block chain, highlighted the potential new financial technologies can have to improve global market efficiencies, and provide emerging market jurisdictions with the infrastructure needed to further develop their capital markets.
The Board discussed and endorsed intensifying work on technological change – with a focus on harnessing the opportunities while mitigating the risks. The Board:
· agreed on further research on financial technology subsectors with particular relevance for securities regulators, including blockchain.
· supported further work on the use and regulation of automated advice tools in securities markets and understanding the risks arising from the use of cloud technology;
· discussed a report on IOSCO’s work addressing the challenges of cyber risk;
· heard updates on the work of the Growth and Emerging Markets Committee on digitization and fintech.
On capacity building and co-operation, the Board took a number of important steps to assist IOSCO members in both developed and growth and emerging markets. The Board:
· approved the framework for a Global Certificate Program to be run in conjunction with the Program of International Financial Systems at Harvard University and designed specifically for market regulators;
· welcomed the completion of an Online Toolkit for Regulatory Capacity Building to be launched in March;
· progressed work on the enhanced IOSCO Multilateral Memorandum of Understanding on cooperation and the exchange of information, with a view to seeking Presidents’ Committee approval in Lima in May;
· supported further work on regulator powers to compel witness statements on behalf of a foreign securities regulator and another proposal about regulators taking enforcement action based on sanctions in foreign jurisdictions;
The Board also agreed that the first regional IOSCO capacity building hub would be hosted by the Securities Commission Malaysia and agreed the Capital Market Board of Turkey and the UAE Securities and Commodities Authority would host hubs at a later date.
The IOSCO Board Chairman said ‘The Regional Hub in Kuala Lumpur will take IOSCO to a new level and will play a significant role in developing and deepening regional capital markets. I would like to congratulate the Securities Commission Malaysia for being the first IOSCO Regional Hub and successfully fulfilling the relevant criteria’
FSB Chair Governor Mark Carney attended the first afternoon of the Board meeting and outlined the FSB priorities for 2016 in the context of the Chinese G20 Presidency for 2016.
His discussions with the Board confirmed the critical importance of IOSCO contributions to the ongoing FSB work on financial stability and highlighted the growing importance of capital market development to economic growth.
Discussions with Governor Carney on asset management, CCPs and market conduct were an opportunity for the Board to underscore and advocate IOSCO’s shared objectives with the FSB, as well as ensuring consistent implementation of market reforms, building strong capital markets and responding to potential risks. Board members agreed to explore further opportunities to strengthen the cooperation between the two organizations.
In the context of the Chinese G20 Presidency, the Board also discussed IOSCO’s contributions to work on G20 green finance initiatives and infrastructure financing
In other key policy areas, the Board heard updates on IOSCO´s work on audit quality, securitization, revisions to IOSCO’s Objectives and Principles of Securities Regulation and supporting Methodology and the forward work plan for 2016 for the IOSCO Research Function and the IOSCO Assessment Committee. The Board also discussed IOSCO’s approach to engagement on Integrated Reporting.
The Board also agreed to introduce Arabic as an official language. In addition, it confirmed Budapest as the host of the 2018 IOSCO Annual Conference and Sydney as the host of the 2019 IOSCO Annual Conference.
