The International Organization of Securities Commissions (IOSCO) published recommendations for market interventions and securitization in emerging markets after meeting at Istanbul last week.
Its emerging markets committee (EMC) met in Istanbul last week and approved two reports that had recommendations for regulators in emerging markets jurisdictions.
These reports are aimed at assisting the regulators to handle issues in the securitization markets while the other looks into the effectiveness of various market interventions in these sectors.
The report that relates to securtization is called Securitization and Securitized Debt in Emerging Markets while the other report is called Effectiveness of Market Interventions in Emerging Markets.
Securitization Report
The report on securitization included suggestions on both the enabling conditions necessary to develop the securitization markets and those as well as needed to further development these sectors. The enabling conditions are as follows: a stable macroeconomic environment; a robust legal and accounting framework; a neutral tax system; investor education - financial literacy; and and a robust framework for the securities regulator.
Meanwhile, the IOSCO also enumerated the conditions that would promote the further development of the securitization markets.
These conditions are: emerging market regulators should collect a minimum set of information on the markets to monitor their development as well as find out the potential sources of risk for financial stability or consumer protection; regulators should strengthen disclosure requirements for securitized financial product vis-à-vis buysiders, both for public and private offerings; they should encourage trading of SFPs in public venues, and impose transparency in the OTC markets; emerging markets regulators should nurture the development of regulated pricing agencies; they should establish a minimum framework for key participants of the securitization process; they should strengthen business conduct obligations; and regulators should align credit rating agencies regulation with the IOSCO's code of conduct.
The market interventions report set out implementing measures to intervene in markets, including the regular review of the framework governing interventions in light of the changing trading, among other things.
In other IOSCO news, the organization's technical committee has formed a Task Force on over-the-counter (OTC) Derivatives Regulation.
The new group is aimed at coordinating securities and futures regulators’ efforts to develop supervisory and oversight structures related to OTC derivatives.
