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Regulatory Issues Raised By Changes In Market Structure

The International Organisation of Securities Commissions (IOSCO) published a consultation paper on the regulatory issues raised by changes in market structures.  The 46 page paper seeks to gather evidence to develop recommendations to promote:

  • market liquidity and efficiency;
  • price transparency; and
  • investors’ execution quality in a fragmented environment. 


The consultation provides an overview of the current market structure developments for equities and ETFs, the regulatory framework, the IOSCO main findings and details 4 key recommendations. 

In respect of monitoring the impact of fragmentation on market integrity and efficiency IOSCO observe that as trading spaces evolve, the regulatory framework should evolve as well.  IOSCO recommends that in a competitive environment securities regulators should continuously evaluate the regulatory requirements imposed on different trading spaces and ensure that regulatory requirements are appropriate, with due consideration to the different functions they perform.  The relevant requirements would include those that relate to the transparency of orders and trades, best execution and/or order routing requirements and those that relate to the requirement to report the appropriate information to monitor trading.  IOSCO considers that the regulatory assessment should not only include whether additional requirements are needed, but also whether existing requirements should be revised, clarified or amended to be more effective in a fragmented market. 






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