Iosco Meets With Market Participants

Terry Flanagan

The International Organization of Securities Commissions (Iosco) recently met in Madrid with 60 market participants from more than 20 countries, including some 30 international financial associations and investor groups, to discuss international regulatory reform, challenges faced by securities regulators globally, and the role Iosco will play in addressing them.

Participants welcomed Iosco’s work on cross-border regulation and emphasized its importance in addressing the issues many face in conducting business across a number of jurisdictions.

“The major challenges we face are structural change, the risks posed by innovation and the ongoing globalization of our markets,” said Iosco board chair Greg Medcraft. “By being proactive and forward looking, Iosco through its standard setting work, engagement with industry and stakeholders and co-operation among its members can make a significant contribution to those challenges. This meeting is a fine example of the way engagement with industry can help us to better understand these challenges and how we should respond.”

The discussions during the meeting underscored Iosco´s determination to engage with industry and stakeholders in developing early and forward-looking responses to the challenges that securities markets face in a rapidly evolving environment.

“This was an important and constructive engagement with stakeholders and is part of our on-going endeavor to meet the Iosco objectives of reducing systemic risk and ensuring that investors are confident and informed, and markets are fair and efficient,” Medcraft said.

The impact of regulatory changes such as Dodd-Frank, Emir, AIFMD, and Basel III has been traumatic, especially for the buy side.

“It’s clear that the buy-side has recognized that it faces permanent structural changes in its daily operating environment,” said Steve Grob, director of group strategy at Fidessa. “This is made worse by the feeling that it has been abandoned by the regulators at a time when the sell-side is also struggling to make sense of the same challenges and the quest for alpha keeps getting harder and harder.”

Grob added: “In this environment, those buy-sides that can adapt quickest will prevail. We can already see exciting developments emerging and this paper looks at some of the latest innovations. In particular, how intelligently designed and implemented technology is providing the foundation for the new business models that will succeed.”

The Iosco meeting also discussed the opportunities behavioral economics offers securities regulators. In leading discussion on this topic, Medcraft emphasized the growing role behavioral economics and social media will play in Iosco´s work, particularly in its efforts to improve informed decision making by retail investors.

The Iosco Board is currently made up of 31 securities regulators. Medcraft, chairman of the Australian Securities and Investments Commission, is the chair of the Iosco Board. The members of the Board are the securities regulatory authorities of Argentina, Australia, Belgium, Brazil, Chile, China, France, Germany, Hong Kong, and India.

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