Securities and markets regulatory news, August 2020 # 2

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Recent regulatory developments of interest to financial institutions and markets.

Contents

  • Capital market regulation: FCA speech
  • Liquidity provision in secondary markets for equity securities: IOSCO final report
  • CCP resolution: FSB publishes responses to its consultation

Capital market regulation: FCA speech

The FCA has published a speech given by Mark Steward, Executive Director of Enforcement and Market Oversight on "Capital market regulation and coronavirus". Among other things, Mr Steward talks about the market value of effective regulation and temporary measures the FCA has taken to help capital markets during the COVID-19 pandemic.

Liquidity provision in secondary markets for equity securities: IOSCO final report

The International Organization of Securities Commissions (IOSCO) has published a final report on liquidity provision in the secondary markets for equity securities.

The report, which is based on a survey of regulators, trading venues and market intermediaries, outlines how liquidity provision has evolved in equity securities markets in recent years.

In the report, IOSCO provides a summary of survey responses, including about obligations and incentives, and also identifies some common themes on the approaches taken to market making and liquidity provision. It also highlights the themes that regulators could consider as key elements of market making programmes or other liquidity provision incentive arrangements, including:

  • registration of market makers, the formal role given to them and the obligations imposed on them;
  • balancing the obligations and benefits;
  • monitoring for compliance; and
  • public disclosure about market making programmes.

IOSCO notes that the information gathered to inform the report preceded the COVID-19 pandemic, so the report does not specifically address the impact of COVID-19. IOSCO will consider additional work in due course that examines the effects of COVID-19 on various aspects of market structure.

CCP resolution: FSB publishes responses to its consultation

The Financial Stability Board (FSB) has published the responses it received to its 4 May 2020 consultation on guidance on financial resources to support central counterparty (CCP) resolution and on the treatment of CCP equity in resolution.

The FSB expects to publish the final guidance by the end of 2020.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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