The International Organization of Securities Commissions has published its report on regulatory issues raised by changes in market structure, making four recommendations that seek to promote market liquidity and efficiency, price transparency, and investors' execution quality in a fragmented environment.
The report identified possible outstanding issues and risks posed by existing or developing market structures and described how these risks should be addressed.
Finally, it recommended that regulators monitor the impact of fragmentation on market quality.
The report comes in response to a 2010 request from the G20 that IOSCO “develop recommendations to promote markets´ integrity and efficiency to mitigate the risks posed to the financial system by the latest technological developments”.
The report looked at the trading of equities and exchange-traded funds on the most common trading spaces identified in a survey of different jurisdictions, including exchange trading market systems, non-exchange trading market systems, and over the counter trading.
It did not include the trading of derivatives products.
The consultation report was published for public comment on 21 March 2013. Twenty-one comment letters were received from associations, brokers, banks, and data providers.
This final report outlined the current state of play in market structures in most IOSCO jurisdictions, affirming the main findings and challenges identified through the 2012 survey and the 2013 public consultation.
