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22-060MR Securities regulators worldwide to consult on concerns over rapidly evolving retail trading markets
The International Organization of Securities Commissions (IOSCO) has published a consultation paper on retail market conduct issues in the context of the rapidly changing retail investment landscape across the globe.
ASIC has, with co-Chair the Central Bank of Ireland, led a Retail Market Conduct Task Force for IOSCO in reviewing evolving retail investor trends and their implications for market conduct.
The Task Force has identified a number of emerging concerns coinciding with the unprecedented surge in retail trading particularly by new investors and the Task Force is encouraging regulators globally to identify effective tools to consider in addressing these risks.
The review examined the driving forces underpinning conduct such as increased gamification, widespread self-directed trading and the influence of social media on investor behaviour.
The Consultation paper builds on the short-term report published in December 2020 which identified some of the traditional tools and innovative and proactive approaches used by IOSCO members to combat misconduct during market stress.
ASIC Commissioner, and Task Force co-chair, Sean Hughes noted, “This is a worldwide phenomenon, and likely to be an on-going challenge for regulators and the broader investment community, especially where the harm is digitally-enabled. Like ASIC, our counterparts around the world are observing common types of harmful behaviour include mis-selling, mis-labelling and misleading disclosure – all of which have the potential to undermine confidence and stability.
“The Retail Market Conduct Task Force has provided a timely opportunity to compare our experiences with other regulators and understand what innovative tools are being implemented successfully.
“Australia’s experience indicates that a flexible and creative use of regulatory tools is important in acting quickly to disrupt misconduct. We encourage a broad range of stakeholders - including retail investors, financial consumers and market participants - to engage with the IOSCO consultation.”
The consultation is open until 23 May 2022.