IOSCO Proposes Revisions to Commodity Derivatives Market Principles

IOSCO requested comment on proposed modifications to its "2011 Principles for the Regulation and Supervision of the Commodity Derivatives Markets." The Principles support the regulatory supervision of product discovery and hedging in the commodity derivatives markets while limiting "manipulation and abusive practices."

Proposed modifications to the Principles concern (i) market surveillance, transparency and price discovery, (ii) the relationship between physical markets and commodity derivatives markets, (iii) the response to "disorderly markets" and market abuse, and (iv) the enforcement authority of trading platforms with respect to "end-user behaviors."

IOSCO indicated that it was soliciting feedback in response to market developments, including (i) regulatory changes, (ii) an increased dependence on electronic trading and data, (iii) technological advancements, (iv) unforeseen disruptions and (v) multi-market trading abuses. IOSCO emphasized that an understanding of price formation in the commodity derivatives markets rests on an understanding of prices in the physical commodity markets.

Comments on the proposed updates to the Principles are due by January 17, 2022.