Four REMIT Fines Announced by Bulgarian Regulator
EWRC has announced four separate REMIT enforcement actions to various market participants for Article 4 disclosure breaches and a registration failing.
This week IOSCO, the global association of national securities regulators, announced (click here) the publication of their targeted report reviewing the implementation of their Principles for the Regulation and Supervision of Commodity Derivatives Markets following a recent survey.
The 19-page final report can be found here. For context, IOSCO publish and maintain a set of principles whose objective it is to ensure that commodity derivatives markets serve their fundamental functions of facilitating price discovery and hedging, while remaining free from manipulation and abusive practices. IOSCO periodically refresh these principles, the last occasion being in January 2023. The prevailing principles may be found here.
The report published this week was “targeted” as it covered only five of the Principles – specifically Principles 9, 12, 14, 15, and 16. These were selected as they are seen key to addressing excessive commodity market volatility, over-the-counter (OTC) derivatives transparency and the orderly functioning of commodity derivatives markets. IOSCO believes that the proper implementation of the selected Principles will help to mitigate the impact of external factors which may disrupt commodity markets, as has recently been experienced.
The Chair of the IOSCO Committee on Derivatives commented:
The need to enhance the resilience of the commodities market remains a priority for regulators globally. The recommendations included in this report can help IOSCO members to implement the Principles and enhance the resilience of their markets.
The report concludes that the majority of respondents to IOSCO’s survey were broadly compliant with the selected Principles. However, both regulators and exchanges identified significant challenges in implementing certain elements of the Principles within OTC markets. The key findings and recommendations of the report are summarised below:
Principle 9: OTC Transparency:
Principle 12: Authority to Obtain Information:
Principle 14: Large Positions:
Principle 15: Intervention Powers in the Market and Principle 16: Unexpected Disruptions in the Market:
We summarise IOSCO’s key recommendations below. For those wishing to understand these recommendations in further detail, please consult the report directly starting on page 16 (as numbered):
In addition to implementing the above recommendations, IOSCO plans to undertake further work based on the results of this review dealing with the ability of exchanges and certain regulators to collect and aggregate information about OTC positions. While IOSCO’s recommendations are high level, their main audience for such reports are national regulators. Their recommendations have a clear and discernible impact on the direction of travel of many of these regulators. As such, keeping abreast of such reporting and recommendations can provide compliance with a valuable “heads-up” on potential future focus areas of financial regulators.
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