IOSCO published its Task Force report on the regulation of wholesale market conduct. The report describes the tools and approaches that IOSCO members use to discourage, identify, prevent, and sanction misconduct by individuals in wholesale markets. The report also identifies the tools used by market regulators to minimize misconduct risk arising from the particular characteristics of wholesale markets.
The report describes the regulatory requirements for market participants in wholesale markets. These requirements are based on broad expectations of the market conduct, such as honesty, integrity, and competence. These expectations are consistent with the existing IOSCO principles, standards, and other initiatives on conduct regulation, including its Principles for Financial Benchmarks, which were published in July 2013. The report also provides an overview of the ways in which market regulators help ensure that firms and individuals meet their obligations under the legal, regulatory, and supervisory frameworks in their jurisdictions.
The efficient functioning of wholesale financial markets is critical to both global and national economies. Ashley Alder, Chair of the IOSCO Board and Chair of the Task Force on Market Conduct, said “Misconduct erodes investor trust and confidence in financial services and undermines the effective operation of financial markets, including wholesale markets.” Relevant tools to address this risk include tailored enforcement and remedial sanctions, such as orders to participate in market structural reforms or agreed remediation and other undertakings; surveillance and data analysis to identify suspicious trades; and the protection of whistleblowers.
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