virtual regulation
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Some of the world’s securities regulators need to do a better job of adopting processes to manage systemic risk, and to ensure that the scope of regulation is properly calibrated, according to a report by the International Organization of Securities Commissions (IOSCO).

Following a review of the implementation of a couple of IOSCO’s core principles, the group of global regulators reported that it found a “generally high” degree of adherence in the 50 countries that it reviewed — in both developed and emerging markets (including Canada’s big four regulators in Ontario, Quebec, Alberta and British Columbia) — but also that there’s room for improvement in certain areas.

For instance, it found that some jurisdictions don’t have “clear responsibilities, definitions and regulatory processes with respect to systemic risk,” and that others don’t have an adequate capacity for sharing information to guard against systemic risk.

And, when it comes to defining the regulatory perimeter, the review also found that some countries don’t have a formal process for assessing unregulated products, services, or markets — such as the emerging crypto sector, fintechs and finfluencers — to determine whether they should be brought under regulatory oversight.

“For a number of the jurisdictions, the frequency/timeframe for the review process needs to be better formalized,” it noted.

As a result, the report makes several recommendations for participating jurisdictions to consider to address implementation gaps.

“To effectively fulfil the core objectives of IOSCO, regulators should adhere to the principles set forth [by] IOSCO,” said Jean-Paul Servais, IOSCO board chair and chair of the Belgium Financial Services & Markets Authority, in a release.

“This includes ensuring that regulatory processes are robust enough to manage systemic risk, with adequate resources and formal mechanisms for reviewing the regulatory perimeter on an ongoing basis,” he added.