Discussions at the annual meeting of the International Organization of Securities Commissions (IOSCO) Growth and Emerging Markets (GEM) Committee, in Bali, Indonesia focused on the rising risks in emerging capital markets, and the need for regulators to ensure stability, IOSCO announced on Thursday.
“At the roundtable discussion with leading global market analysts, the GEM committee discussed current global financial risks including the implications of declining economic growth and divergent monetary policies including uncertainties in the U.S. Fed’s interest rate path, slowdown of the Chinese economy, decline in commodity prices, enhanced market volatility and their effects on emerging markets,” IOSCO says in a statement.
“Discussions also focused on the factors underlying some tight liquidity conditions and pressures on emerging markets corporate debt exposure, particularly given rising U.S. dollar and interest rates,” the statement adds.
Given these rising risks, the regulators stressed the importance of demonstrating the ability to withstand this heightened volatility. “In this current sentiment-driven environment, it is critical that emerging market regulators continue to enhance structural resiliency and focus on building strong fundamentals and robust governance,” the IOSCO statement says.
“Ongoing structural shifts in an increasingly interconnected global financial landscape and synchronized cycles require deep and resilient capital markets that are able to withstand global volatility whilst allowing markets to operate in an orderly manner,” says Ranjit Ajit Singh, chairman of the GEM Committee, IOSCO vice chairman, and chairman of Malaysia’s securities commission.
At the annual meeting, the GEM committee also discussed other issues, including the impact of fintech on regulation, supervision, market surveillance, and the implications for market risks, incentives and behaviour. The regulators also discussed their work on strengthening corporate governance and market conduct.
The committee also held a cybersecurity exercise, which featured a simulated cyber-attack involving participants from more than 40 jurisdictions. “The simulation provided a critical platform to raise awareness of the consequences of the evolving cyber-threat and to discuss effective responses,” the IOSCO statement says.