IOSCO issued a final report providing measures for securities regulators to consider when addressing the risks arising from the marketing and sale of OTC leveraged products to retail investors. The report contains three complementary toolkits that cover the marketing and sale of rolling-spot forex contracts, contracts for differences (CFDs) and binary options. IOSCO also issued a public statement on the risks of binary options and the response of regulators for mitigating the risks and harm to retail investors transacting in these products.
The report on retail OTC leveraged products contains measures aimed at increasing the protection of retail investors who are offered OTC leveraged products, often on a cross-border basis. The toolkits set out guidance for regulators on:
- Policy measures that can help to address the risks arising from the marketing and sale of OTC leveraged products by intermediaries
- Educating investors about the risks of OTC leveraged products and the firms offering them
- Enforcement approaches and practices to mitigate the risks posed by unlicensed firms offering the products
The measures in the three toolkits draw largely on IOSCO members’ experiences and practices. The toolkits described in this report do not mandate regulatory action. The initiatives are intended to serve as useful guidance to IOSCO members as they consider their approaches to address the risks arising from the marketing and sale of OTC leveraged products to retail investors. IOSCO members are encouraged to consider adopting one or several of these measures, in accordance with their legal and regulatory framework and the specific risks they have identified, to help ensure an appropriately high level of protection for retail investors transacting in the relevant products. Therefore, implementation of the different measures may vary across IOSCO members.
Keywords: International, Securities, OTC Leveraged Products, Customer Protection, IOSCO
Previous ArticleOCC Proposes to Amend Guidelines on Recovery Planning Standards
APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.
ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.
MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.
ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.
BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.
EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.
SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.