IOSCO Consults on Measures To Reduce Conflict Of Interests In Debt Capital Raising

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Monday, December 16, 2019 / 17:37PM /  By IOSCO  /   Header Image Credit: Ethics Unwrapped - The University of Texas at Austin  


The Board of the International Organization of Securities Commissions (IOSCO) is requesting feedback on proposed guidance to help IOSCO members address potential conflicts of interest and associated conduct risks arising from the role of market intermediaries in the debt capital raising process.


Conflicts of interest and associated conduct risks can weaken investor confidence and undermine debt capital markets as an effective vehicle for issuers to raise funding. To help regulators identify and address these risks, IOSCO today published the consultation report Conflicts of interest and associated conduct risks during the debt capital raising process.


Among other things, the consultation seeks public comments on the use of Distributed Ledger Technology (DLT) in bond issuances and the potential benefits and risks of using this technology, including for managing conflicts of interest.


The report describes the key stages of the debt raising process where the role of intermediaries might give rise to conflicts of interest.


The proposed guidance is comprised of eight measures grouped according to three (3) key aspects of the debt raising process: 

  • pricing of debt securities and risk management transactions

  • quality of available information to investors

  • allocations of debt securities


While the guidance focuses on traditional corporate bonds, it may prove useful to IOSCO members considering raising capital through other types of debt securities.


The guidance is the second part of a two-stage project on conflicts of interest in capital raising.  The first stage focused on the equity capital raising process with the final report Conflicts of interest and associated conduct risks during the equity capital raising process being published in September 2018


IOSCO welcomes comments on this consultation report on or before 16 February 2020.


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