06 March 2009

IOSCO recommendations on commodity futures markets oversight

IOSCO recommends that futures markets regulators should review their authority and powers to ensure that they obtain the necessary legal powers and the ability and sufficient resources for enforcement programs.

IOSCO released its final report which contains recommendations to improve the supervision of commodity futures markets and global regulatory co-operation. The report focuses on whether futures market regulators’ supervisory approaches were appropriate in light of recent market developments. 

 

The recommendations focus on the ability of futures market regulators to access relevant information concerning related commodity markets over which futures market regulators generally do not have jurisdiction, such as the cash and OTC derivatives markets, improving regulators’ supervisory and enforcement powers and the enhancement of global co-operation.

 

“The complexity 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 the Technical Committee, said.

 

IOSCO recommends that futures markets regulators should review their authority and powers to ensure that they obtain the necessary legal powers. They should review their existing statutory and administrative market abuse authority, and ensure that they have the ability and sufficient resources for enforcement programs.

 

The key recommendations are:

Ø       Evaluating regulators’ oversight programs against the standards set forth in the  Tokyo Communiqué.

Ø       Reviewing regulators’ powers to ensure they are able to access the information necessary for  effective market surveillance;

Ø       Promoting improvements or eliminating impediments to regulators’ legal and regulatory frameworks that may inhibit their ability to detect and enforce manipulation cases;

Ø       Establishing periodic meetings among futures market regulators to share concerns on trends and developments in commodity markets as well as the sharing of market surveillance and enforcement techniques.

 

Press release

Full report

 

© IOSCO