WASHINGTON, DC - The International Organisation of Securities Commissions (Iosco) Technical Committee, chaired by Christopher Cox, chairman of the US Securities and Exchange Commission (SEC), has launched three task forces to support G-20 aims following a meeting on November 24.
The meeting, convened by Cox, was intended to craft a detailed work programme to address the continuing market turmoil, focusing on strengthening financial markets and investor protection.
"Iosco's Technical Committee is taking urgent action to co-ordinate global regulatory measures aimed at abusive short selling, including reporting requirements for short positions and trading activity," says Cox. "Being representative of more than 100 securities regulators worldwide, Iosco is central to developing co-ordinated regulatory solutions to deal with the current financial crisis. To be effective, the regulation of trading abuses must be co-ordinated across major markets. This is equally true not only of short selling, but also of 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 global capital markets address the current turmoil on a sound basis and in a well-co-ordinated way."
The new task forces will consider issues surrounding short selling, unregulated financial markets and products, as well as unregulated financial entities.
The task force looking at short selling will work to eliminate gaps in various regulatory approaches to naked short selling, including delivery requirements and disclosure of short positions. It will also examine how to minimise adverse effects on legitimate securities lending, hedging and other types of transactions that are critical to capital formation and to reducing market volatility. The Securities and Futures Commission of Hong Kong will chair the task force.
Given the effect unregulated financial markets and products have had on global capital markets, the second task force will examine ways to introduce greater transparency and oversight to unregulated market segments, such as over-the-counter markets for derivatives and other structured financial products. This force will be co-chaired by the Australian Securities and Investments Commission and France's Autorité de Marché Financiers.
The final task force 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. It will be chaired by Italy's Consob and the UK Financial Services Authority.
The working groups will present their reports at the next Technical Committee meeting in February 2009 and to the next G-20 summit in spring 2009.