IOSCO publishes a Final Report following its review of IOSCO Standards Implementation Monitoring (ISIM) for Regulator Principles 6 and 7 which address systemic risk and perimeter of regulation.

IOSCO’s Objectives and Principles of Securities Regulation 6 and 7 stipulate that regulators should have or contribute to processes to identify, monitor, mitigate and manage systemic risk, as well as have or contribute to a process to review the perimeter of regulation regularly.

This ISIM Review by IOSCO’s Assessment Committee found a high level of implementation across the 55 jurisdictions from both emerging and advanced markets.

The ISIM Report highlights some good practices and also identifies a few areas where there is room for improvement, observed primarily in some emerging markets. For example, the Report notes that some jurisdictions do not have clear responsibilities, definitions and regulatory processes with respect to systemic risk.

Other jurisdictions lack a proper information-sharing framework among various regulators to manage systemic risk. On the perimeter of regulation, some members mentioned the lack of a formal process to review any unregulated products, activities or markets.

Jean-Paul Servais, IOSCO Board Chair and Chair of the Belgium Financial Services & Markets Authority, said: “To effectively fulfil the core objectives of IOSCO, regulators should adhere to the principles set forth in IOSCO’s Principles 6 and 7. 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.”

Laurent Van Burik, Assessment Committee Chair, said: “We are highly encouraged by the results of this Review, which demonstrate significant progress in adhering to IOSCO’s Principles 6 and 7 across both developed and emerging markets. We will continue to assist those members where the Report identified gaps in implementation by sharing best practices and providing capacity-building support.”