INTERNATIONAL: The World Federation of Exchanges Responds to IOSCO’s Consultation on Volatility Control Mechanisms

Wednesday May 9 2018

The World Federation of Exchanges (“WFE”), the global industry group for exchanges and CCPs, has responded to IOSCO’s Consultation Report on ‘Mechanisms used by trading venues to manage extreme volatility and preserve orderly trading’.

In its response to the Consultation WFE made the following remarks:

• The WFE agrees that avoiding a one-size-fits-all template for volatility control is important, and encourages policymakers and regulators to adopt a flexible, principles-based approach. Venues must have the ability to tailor and improve systems and controls to meet the needs of their markets and market participants as circumstances dictate.
• VCMs are most effective when the costs and benefits of interventions are carefully analysed. The efficiency of these tools should be regularly examined against their objectives.
• The WFE welcomes IOSCO’s recommendations on co-ordination between trading venues during periods of market stress. Exchanges should also retain the flexibility to determine the appropriateness and form of communication to market participants and the wider public when a mechanism is triggered.

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