Letter from the IOSCO Secretary General

Author Name: 
Greg Tanzer

Dear Members of the World Federation of Exchanges 

I want to thank Thomas Krantz, Secretary General, for his kind invitation to contribute a brief update on the International Organization of Securities Commissions’ (IOSCO) work for the members of the World Federation of Exchanges (WFE), and those who head its monthly review, “Focus”. 

This is a timely opportunity for me to speak to you ahead of our Annual Conference in Tel Aviv – hosted by the Israeli Securities Authority and the Tel Aviv Stock Exchange from 8-11 June – which should see the finalisation of some key policy issues of relevance to you all. 

Since I assumed my role as Secretary General of IOSCO, our workload and output has increased greatly, not I might add as a result of my arrival, but as a consequence of the subprime crisis and the global financial crisis which has followed in its wake. 

As the crisis has unfolded the demands on IOSCO both internally, from its members, and externally, from an array of policy makers and market participants, have grown. I believe that IOSCO has risen to these challenges,  has responded appropriately and met the expectations of its stakeholders, both old and new. 

IOSCO’s recent work programme has concentrated on responding to the issues posed by the financial crisis for securities regulators. Principally it has focused on: 

  • supporting the G-20’s aims of strengthening global markets and reforming financial regulation, through the work of its Task Forces on Short Selling, Unregulated Financial Markets and Products, and Unregulated Financial Entities; and
  •  the work of the Subprime Task Force which is addressing the issues of issuer transparency and investor due diligence; firm risk management and prudential supervision; valuation and accounting issues; and credit rating agencies.

As the financial crisis has not fundamentally affected the activities and existence of exchanges as it has other financial institutions, our focus has to some degree been on areas other than the regulation of exchanges and markets. However I know that the proposals of our Task Force on Short Selling, which are aimed at ensuring that short selling operates in a well-structured regulatory framework, are of keen interest to WFE members – in February you identified assisting IOSCO as one of your priorities for 2009. I am glad to see that we have recently received your response to that consultation paper, and no doubt this input will provide the Task Force with valuable industry insight on the issue and will be of assistance in formulating the final recommendations. We expect that the Task Force’s report will be finalised during the meetings at our Annual Conference.

We have also been closely considering unregulated or under-regulated entities, markets and products.  It is a striking feature of the current crisis that the infrastructure of our regulated markets has stood up very well through the turmoil.  At IOSCO we are examining, through our Task Force on Unregulated Markets and Products, whether there are aspects of regulation familiar to regulated market operators, like transparency and clearing and settlement requirements, that should be applied to unregulated or under-regulated markets or products, like the CDS market or securitized products.

WFE members will be very familiar with the recent work of the Technical Committee’s Standing Committee on the Regulation of Secondary Markets (SC2), chaired by Susanne Bergstraesser of BaFIN, whose work focuses on promoting the fairness, efficiency and transparency of securities trading markets.   It has recently received a new mandate for work on the key regulatory issues raised for regulators by the growth of dark liquidity. The issues the mandate will cover include transparency and price discovery; fragmentation; information leakage; fair access; and the ability to access actual trading volume in dark pools. As part of the project SC2 will determine whether it needs to provide guidance to assist regulators in dealing with these issues. It intends to begin shortly its fact-finding work for this project.

SC2 has also recently published consultation papers on Principles on Outsourcing by Markets and Policies on Direct Electronic Access. We expect the outsourcing principles to be finalised and published in June.

Finally I would like to thank the WFE for the active role it continues to play in IOSCO’s stakeholder contact initiative, being an ever present since our first meeting in Tokyo in November 2007. I had the pleasure of being joined at our most recent meeting in January by Massimo Capuano and Thomas Krantz. This close relationship looks set to continue with the participation of William J. Brodsky in our panel on Improving the role of securities regulators in a changing global financial system at the Annual Conference in Tel Aviv.

Thank you again for giving me the opportunity to address you in your newsletter, and we look forward to continuing our close working relationship into the future. 

About Greg Tanzer

Greg Tanzer was appointed Secretary General of the International Organization of Securities Commissions (IOSCO) in November 2007. He was previously Executive Director for Consumer Protection and International at the Australian Securities & Investments Commission (ASIC), where he worked from 1992. While at ASIC he chaired IOSCO’s Technical Committee Standing Committee on Investment Management from 1997 to 2003. Before joining ASIC, Greg worked in the Commonwealth Attorney-General’s Department and the Department of Finance. He is a qualified solicitor and barrister.