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Thursday, May 30, 2019 01:03 PM / By
IOSCO
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:
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