IOSCO Makes Key Recommendations to Strengthen Capital Markets

The Growth and Emerging Markets (GEM) Committee, the largest committee within leading international policy forum for securities regulators IOSCO, announced that it has published a report—Development of Emerging Capital Markets: Opportunities, Challenges and Solutions, examining the challenges and opportunities that Emerging Markets jurisdictions (EMs) face.

Drawing on the GEMC’s work on different aspects of market development, from corporate governance and regulatory frameworks to corporate bond markets and market, the report highlights the main challenges faced by EMs in implementing international standards and the role of capacity building.

The report also explores further opportunities offered by sustainable finance and Fintech for developing EMs and analyses the preliminary impact of COVID-19 on EMs focusing on the capital outflows and the operational resilience of these markets during the pandemic.

The report makes five key recommendations that EMs should consider when seeking to strengthen their capital markets:

• Recommendation 1: Policy makers and regulators should develop a holistic strategy for the development of capital markets.

• Recommendation 2: Regulators should seek to ensure that capital markets are fair and efficient for capital raising. Increasing institutional investor participation, providing diversified investment choices and ensuring market confidence should be high priorities on their agenda.

• Recommendation 3: Securities regulators should have adequate powers, proper resources and the capacity to perform their functions and exercise their powers.

• Recommendation 4: Jurisdictions should establish strong national and international cooperation arrangements to develop capital markets with the key involvement of the securities regulator.

• Recommendation 5: Regulators and market participants should develop and implement efficient roadmaps for investor education and guidance.

Dr Obaid, the GEMC Chair, said: “There is no denying that markets face continuous challenges arising from new financial products and the growing use of financial technologies, among other things. As a result, EMs must learn to adapt quickly to new challenges that affect their capital markets. This report suggests some insightful recommendations that GEMC members are encouraged to consider when seeking to strengthen their markets.”