The Board of the International Organization of Securities Commissions (IOSCO) today published its 2021-2022 work program to further its core objectives of protecting investors, maintaining fair, efficient, and transparent markets, and addressing systemic risks. The work program, unlike previous editions, covers a two-year horizon and will be reviewed and refreshed as appropriate at end-2021 to ensure its ongoing relevance.
The 2021-2022 work program encompasses work with respect to two new priorities, namely:
- Financial stability and systemic risks of non-bank financial intermediation activities (NBFI); and
- Risks exacerbated by the COVID-19 pandemic – misconduct risks, fraud, and operational resilience.
With concerns persisting about COVID-19’s continuing impact on global economic activity and the macro-financial outlook, the 2021-2022 work program calls on IOSCO through these two new priorities to maintain a core focus on critical work underway since March 2020 to respond to the ongoing impacts of the pandemic in the capital markets.
As a central tenet of its agenda, the priority to address financial stability and systemic risks in NBFI in response to the COVID-19 induced market stresses will continue to be led by the IOSCO Financial Stability Engagement Group to drive the initiatives identified under this work program. Alongside this, the COVID-19 pandemic has created economic and social situations, such as job losses, financial strains, physical and social isolation, and active online engagement, which can increase conduct risk and magnify retail investors’ susceptibility to scams and frauds. Work in this area under the second new priority will be led by the IOSCO Retail Market Conduct Task Force, while IOSCO’s Committees on Secondary Markets and Market Intermediaries will initiate joint work on operational risks.
With respect to sustainability-related issues in capital markets, the work program calls on IOSCO to re-double efforts in contributing to the urgent goal of improving the completeness, consistency, and comparability of sustainability reporting under the stewardship of its Sustainable Finance Task Force. The Task Force will also continue to progress on two other important areas covering (i) asset managers and greenwashing, and (ii) ESG ratings, and ESG data providers (please see press release on IOSCO’s work in this area).
IOSCO will also continue its efforts on six specific priorities identified by the Board for 2020, all of which will continue to be priorities in 2021 and 2022, namely (1) corporate debt and leveraged finance, (2) crypto assets, (3) market fragmentation in securities and derivatives markets, (4) artificial intelligence and machine learning, (5) passive investing and index providers and (6) retail distribution and digitalization. The 2021-2022 work program provides an update on these six existing priorities as well as an overview of the planned work on the two new priorities.
IOSCO will also further its efforts in other important areas, including matters of special importance to growth and emerging markets (GEM), the ongoing implications for securities markets of financial innovation and digitalization developments through the ICO and Fintech Networks, its collaboration with other standard setting bodies, as well as implementation monitoring, capacity building for its members and supporting investor education as a critical pillar of investor protection.
Ashley Alder, Chair of the IOSCO Board, said: “In 2020, our agenda was dominated by the response to COVID-19 induced market stresses. IOSCO has actively taken steps to address potential financial stability risks including a particular focus on non-bank financial intermediation activities. Much of this work has been led by IOSCO’s Financial Stability Engagement Group.
In 2021 and beyond, the response to the risks arising from COVID-19 will continue to be a key pillar of IOSCO’s agenda. IOSCO will also continue to focus on investor protection and market integrity, as well as examining the impacts of COVID-19 – and in particular remote working – on misconduct risks, fraud, and operational resilience. Through the work of the Sustainable Finance Task Force IOSCO will play a leading role in addressing the urgent goal of improving the completeness, consistency, and comparability of sustainability reporting. In doing so, IOSCO will further explore the establishment of a global comprehensive corporate reporting system under the IFRS Foundation.”
