INTERNATIONAL: IOSCO Reports on Implementation of G20/FSB Recommendations to Strengthen Securities Markets

Thursday November 9 2017

The Board of the International Organization of Securities Commissions (IOSCO) have published a report on the implementation of the G20/FSB post-crisis recommendations aimed at strengthening securities markets.

The Implementation Report: G20/FSB Recommendations related to Securities Markets was prepared by IOSCO’s Assessment Committee and is designed to provide further clarity on the recommendations and the role of securities market regulators in overseeing how these recommendations are implemented.

IOSCO’s Implementation Monitoring Report finds that most responding jurisdictions have taken steps to implement the G20/FSB recommendations and IOSCO guidance in each of the designated areas. Similar to last year, implementation is most advanced with respect to hedge funds, structured products and securitisation, and the oversight of credit rating agencies (CRAs). In the area of safeguarding the integrity and efficiency of markets, where progress in implementation has lagged, jurisdictions reported that they have undertaken some work to harmonise and strengthen their rules.

The report covers the following areas relating to securities markets:

• Hedge funds;
• Structured products and securitisation;
• Oversight of CRAs;
• Measures to safeguard the integrity and efficiency of markets;
• Commodity derivative markets.

The G20 recommendation called for mechanisms for cooperation and information sharing in order to ensure effective oversight when a hedge fund is located in a different jurisdiction from the manager. In reporting on implementation of this recommendation, jurisdictions were asked to take note of Principle 28 of IOSCO’s Objectives and Principles of Securities Regulation and Recommendation 6 of IOSCO’s 2009 Report. Bilateral supervisory cooperation should also be guided by IOSCO’s Principles Regarding Cross-border Supervisory Cooperation (May 2010).  The sixth high-level principle in the IOSCO 2009 Report recommended that regulators have the authority to cooperate and share information, where appropriate, in order to facilitate efficient and effective oversight of globally active hedge fund managers and advisers and to help identify systemic risks.

The overall implementation status is unchanged from last year’s survey. All responding jurisdictions except one (China) that permit or have hedge funds report having taken steps to enhance cross-border information sharing, either through hedge fund specific cooperation arrangements or more general supervisory cooperation arrangements.

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