The ever-expanding business models of stock exchanges are set to come under closer scrutiny from the International Organisation or Securities Commissions (IOSCO).
The association of securities regulators has launched a consultation paper to examine the risks associated with the evolving business models of stock exchanges and other market infrastructures.
According to IOSCO, there has been a shift towards more competitive, cross-border and diversified operations with exchanges becoming more like large corporates.
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It is not just the acquisitions of other exchanges that have altered the traditional business model but the purchase of data providers, digital asset platforms and other ancillary services.
Of particular concern to IOSCO are the regulatory and governance implications for multinational exchange groups, including potential conflicts of interest arising from “matrix structures” and the challenge of overseeing individual exchanges within “exchange groups”.
IOSCO has issued six recommendations to regulators covering issues such as conflicts of interest and regulatory compliance and calling for a monitoring of the structure and ownership of large exchange groups.
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“In today’s rapidly evolving financial landscape, this consultation report sheds light on the shifts occurring within exchanges worldwide and offers six good practices as well as supervisory toolkits which aim to address the challenges and ensure effective oversight in this evolving environment,” said Isadora Tarola, chair of the IOSCO committee on regulation of secondary markets.
Market participants have until July 3 to provide comments on the consultation paper.
