IOSCO report presents the progress in improving the transparency and oversight of oil markets. The report focused on topics including volatility and the role of new participants in futures markets; transparency and market surveillance.
The IOSCO Task Force on Commodity Futures Markets was created in September 2008 as a response to global concerns, including those voiced by the G8 Finance Ministers concerning price increases and volatility in oil and food products. The G8 Finance Ministers specifically called for “national authorities to examine the functioning of commodity futures markets and to take appropriate measures as needed.” Responding to these concerns, the Task Force held meetings in Washington, DC in December 2008 and in London in January 2009. The group focused on the following topics:
· Volatility and the role of new participants in futures markets;
· Transparency and market surveillance;
· Challenges to enforcement; and
· Enhancing global cooperation.
The primary focus of the Task Force was to control whether supervisory approaches were keeping pace with market developments, including the participation of new categories of traders such as index funds, whether transparency in commodity markets was sufficient in light of current concerns, and whether supervisory and enforcement cooperation could be improved.
The Task Force reports visible commitments from the industry to assist in bringing needed transparency to this marketplace. The CMD and the ISDA COSC, collectively referred to as “major commodity participants”, have agreed to:
· Work with and report to the Task Force in pursuing greater transparency in OTC oil derivatives;
· Deliver a timeline for deliverables that will facilitate greater transparency and operational efficiencies in OTC oil derivatives by the end of May 2010;
· Conduct a survey of the ISDA COSC to assess the size and composition of the OTC oil financial derivatives market, thus informing consideration to introduce existing CMD metrics to non-dealer members of the ISDA COSC and work to understand the extent of electronic confirm matching; and
· Accelerate work on previous commitments (outlined in the CMD‟s December 7, 2009 letter 8), which are intended to strengthen the resilience and robustness of the OTC commodity derivatives infrastructure in the global OTC commodity derivatives markets, including increased transparency, electronic processing and standardization.
© IOSCO
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