IOSCO Consultation Report on Regulatory Issues Raised by the Impact of Technological Changes on Market Integrity and Efficiency
IOSCO Consultation Report CR02-11 Regulatory Issues Raised by the Impact of Technological Changes on Market Integrity and Efficiency
The Technical Committee of the IOSCO has published a Consultation Report on Regulatory Issues Raised by the Impact of Technological Changes on Market Integrity and Efficiency (Report), which is aimed at developing recommendations to mitigate the risks posed to the financial system by the latest technological developments, such as high frequency trading. The work is being carried out in response to a G20 Leaders request during the Seoul Summit in 2010.
The Report analyses the most significant technological developments and related micro-structural issues that have arisen in financial markets in recent years, notably high frequency trading, and their impact on market structure, participants’ behaviour, price discovery and formation and also on the availability and accessibility of liquidity. It also considers other micro-structural related topics such as co-location, tick sizes, fee structures, indications of interest etc. and presents an analysis on trading control mechanisms.
Please find attached links to the following:
· Media Statement - IOSCO consults on issues raised for market efficiency and integrity by technological developments http://www.iosco.org/news/pdf/IOSCONEWS211.pdf
· Technical Committee Consultation Report CR02-11 Regulatory Issues Raised by the Impact of Technological Changes on Market Integrity and Efficiency http://www.iosco.org/library/pubdocs/pdf/IOSCOPD354.pdf
· Letter from IOSCO Technical Committee Chairman to the Financial Stability Board re IOSCO’s recommendations on market integrity and efficiency http://www.iosco.org/library/briefing_notes/pdf/IOSCOBN02-11.pdf
The Consultation Report:
The Report is part of IOSCO’s work to support the G20’s aim of improving market integrity and efficiency, and:
- identifies the main technological developments and the impact/risks these have had on securities markets including algo trading/HFT, market fragmentation & dark liquidity, direct electronic access, co-location, tick sizes and co-location;
- outlines the standards and recommendations already developed by IOSCO related to market integrity and efficiency – dark liquidity, direct electronic access, short selling, OTC derivatives and transparency of structured finance products;
- poses questions on issues raised by technological developments that have not previously been formally consulted on, focusing especially on the impact resulting from high frequency trading; and
- outlines additional work that IOSCO will undertake to address fundamental issues on market surveillance and market structure.
IOSCO intends to deliver its final report to G20 Finance Ministers in October. Closing Date for Responses – 12 August 2011
Please note that, as the Technical Committee intends to deliver its Final Report to the G20 Finance Ministers in October 2011, the closing date for responses to the Consultation Report is the 12 August 2011 and responses received after that date will not be considered for the Final Report.
Head of Communications & Outreach
International Organization of Securities Commissions
Direct: + 34 91 787 0419
Mob: + 34 679 969 004