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In the report, IOSCO seeks to gather evidence and views for developing recommendations that promote market liquidity and efficiency, price transparency, and investors’ execution quality in a fragmented environment. The report proposes possible policy options and regulatory tools to cope with the potential drawbacks arising from market fragmentation.
The report concludes that securities regulators bear the responsibility for striking an appropriate balance between a market structure that promotes competition among markets, and one that minimises the potentially adverse effects of fragmentation on market integrity and efficiency, price formation, and best execution of investor orders.
Accordingly, it says, an appropriately balanced market structure must provide for strong investor protection, foster fair and efficient capital markets and confidence in those markets, and enable businesses to raise capital for the benefit of the overall economy.
The report makes recommendations to monitor the impact of fragmentation on the following areas:
The closing date for comments to this consultation is 10 May, 2013.