The Board of the International Organization of Securities Commissions (IOSCO) has launched a 90-day public consultation (Consultation Report) outlining a set of Good Practices to promote the integrity and orderly functioning of the Voluntary Carbon Markets (VCMs).

IOSCO calls on stakeholders to engage in this timely and important work by providing their respective insight and expertise in response to the questions included in the Consultation Report.

Announcing the publication of the Consultation Report at COP28, Rodrigo Buenaventura, Chair of the IOSCO Sustainable Finance Taskforce (STF) and Chairman of the Spain CNMV, said “VCMs have gained significant importance in recent years. But, for these markets to succeed, they need integrity – both environmental and financial. I believe IOSCO and its international market expertise will be key in promoting financial integrity and build the trust these markets need to scale” .

The proposed Good Practices build on the Key Considerations included in the Discussion Paper published in November 2022, the feedback received in response to that Discussion Paper, as well as IOSCO members’ knowledge and oversight of financial markets. The Good Practices draw on existing good practices and principles for well-functioning markets, such as IOSCO’s Objectives and Principles of Securities Regulation (including the derivatives markets).

Verena Ross, co-Chair of the STF Carbon Markets Workstream and Chair of the European Securities and Markets Authority (ESMA) said: “As we delved into VCMs, we realized that in addition to environmental integrity vulnerabilities, these markets also lacked some characteristics of fair, efficient and transparent markets that protect investors – characteristics are at the heart of the IOSCO community and core of every well-functioning securities market.”

Rostin Behnam, IOSCO Vice-Chairman and co-Chair of the STF Carbon Markets Workstream as well as Chairman of the U.S. Commodity Futures Trading Commission (U.S. CFTC) noted: “The proposed Good Practices aim to provide a strong foundation on which VCMs may continue to grow by supporting sound market structures, well-reasoned transparency objectives, and common-sense market conduct practices. The Good Practices were informed by the valuable and generous feedback provided by the stakeholders with whom we have engaged to-date and reflect the experience of IOSCO members in regulating financial markets globally.”

Jean-Paul Servais, IOSCO Chairman and Chairman of the Belgium Financial Services and Markets Authority (FSMA) welcomed the publication of the document, noting: “VCMs are a key priority of the COP28 Presidency as a result of the potential role they could play within the international climate policy framework, particularly for emerging markets. But they can only work with financial integrity. And that is what we are trying to instil. As IOSCO Chair, I would like to thank my colleagues Rodrigo Buenaventura, Rostin Behnam and Verena Ross who guided IOSCO through this important Consultation Report.”

Source: IOSCO