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As securities markets are complex and involve a wide range of different types of intermediaries, products, and investors, the paper acknowledged that there is no one-size-fits all method for identifying trends, vulnerabilities and risks in these markets. Instead, it provided concrete examples of the different methods currently employed by the securities commissions who are members of the Committee on Emerging Risks.
The paper is organized around the following themes:
Identifying, analyzing, and monitoring systemic risk is still a new discipline for securities regulators. Therefore this paper should be viewed as another step in the evolutionary work performed by securities regulators in this area. The methods described in the document will continue to evolve and, consequently, this paper will need to be updated or supplemented from time to time. The paper shows that securities regulators increasingly are pairing qualitative risk analysis with quantitative tools. This tendency includes risk dashboards that systematically track quantitative risk indicators, as well as data analytics, econometrics and research that is focused on risk analysis of products, firms and markets, as well as incentives and investor behaviour.