Iosco aims to boost oversight on commodity futures

Today, the International Organisation of Securities Commissions (Iosco) published guidelines for improving the transparency and supervision of commodity futures markets.

The report was published by Iosco's Task Force on Commodities Markets, which was formed in October 2008 following concerns over price volatility - and concerns over market manipulation - in the commodities futures markets.

In an effort to boost international co-operation and facilitate transparency, the guidelines focused on the ability of regulators to access information on commodities markets that they do not oversee - including the cash and OTC derivatives markets.

The report called for a removal of the barriers preventing regulators from collecting the information they need to detect market manipulation or other abuses by market participants holding large positions in commodities contracts.

The task force also noted that futures markets regulators should promote improvements in the quality and transparency of underlying OTC market information, suggesting data providers make efforts to offer greater detail into data and improve its accessibility.

Acknowledging the enforcement challenges facing futures market regulators, the task force also stated that there should be a review of existing market abuse authority to ensure it permits prosecution of attempted manipulation and to ensure regulators have the resources to build enforcement programmes and the ability to investigate for potential abuses.

"The complex and frequent opacity of factors that drive price discovery in the futures markets, combined with the critical importance of commodities markets to the world's economy, argue for continued vigilance to promote the transparency of futures market price formation and the interconnections between regulated futures and related commodity markets," Kathleen Casey, chairman of Iosco's technical committee, said in a statement.

See also: Iosco to tackle trading abuses
Iosco group to turn spotlight on commodity markets