The technical committee of the International Organisation of Securities Commissions has launched task forces to examine issues associated with short selling, unregulated financial markets
The technical committee of the International Organisation of Securities Commissions has launched task forces to examine issues associated with short selling, unregulated financial markets and products, and unregulated financial entities such as hedge funds, following a teleconference convened by Christopher Cox, chairman of the US Securities and Exchange Commission.
Cox, who chairs the Iosco committee, called the meeting of financial regulators from around the world in order to establish a detailed working programme to address the continuing market turmoil by strengthening financial markets and investor protection.
‘Iosco’s technical committee is taking urgent action to coordinate global regulatory measures at abusive short selling, including reporting requirements for short positions and trading activity,’ Cox says.
‘Being representative of more than 100 securities regulators worldwide, Iosco is central to developing coordinated regulatory solutions to deal with the current financial crisis. To be effective, the regulation of trading abuses must be coordinated across major markets.
‘This is equally true not only of short selling, but also derivatives trading and activity by currently unregulated entities such as hedge funds. The three task forces the technical committee is forming on each of these topics will help ensure that global capital markets address the current turmoil on a sound basis and in a well co-ordinated way.’
The task force on short selling has been given the task of working to eliminate gaps in various regulatory approaches to naked short selling, including delivery requirements and disclosure of short positions.
The task force, which will be chaired by the Securities and Futures Commission of Hong Kong, will also examine how to minimise adverse impacts on legitimate securities lending, hedging and other types of transactions critical to capital formation and to reducing market volatility.
The committee says that given the impact unregulated financial markets and products have had on global capital markets, this task force will examine ways to introduce greater transparency and oversight to unregulated market segments, such as OTC markets for derivatives and other structured financial products. It will be co-chaired by the Australian Securities and Investments Commission and France’s Financial Markets Authority.
The third task force, chaired by Italy’s Consob of Italy and the UK’s Financial Services Authority, will examine issues surrounding unregulated entities such as hedge funds, including the development of recommended regulatory approaches to mitigate risks associated with their trading and traditional opacity.
The task forces will present their reports at the next technical committee meeting in February 2009, and they will be considered at the next meeting of the G-20 group of countries later in the spring.
Iosco’s membership comprises regulators of more than 95 per cent of the world’s securities markets, covering more than 100 jurisdictions. The technical committee, made up of 15 agencies that regulate some of the world’s larger, more developed and internationalised markets, reviews major regulatory issues related to international securities and futures transactions and co-ordinates practical responses to concerns. Its members are Australia, France, Germany, Hong Kong, Italy, Japan, Mexico, the Netherlands, Ontario, Quebec, Spain, Switzerland, the UK and US.
