On 29 November 2024, the International Organization of Securities Commissions (IOSCO) issued a final report on the evolution in the operation, governance and business models of exchanges. The final report focuses on equity exchanges but may be of relevance to other types of trading venues and trading in other classes of financial instruments.
Content
The final report:
- Describes and analyses the changes in the structure and organization of exchanges and, in particular, their business models and ownership structure.
- Outlines the impact of these changes on market structure, emphasizing the shift from traditional models to more competitive, cross-border, and diversified operations, whereby exchanges have become part of larger corporate groups, leading to resource-sharing and process consolidation.
- Discusses regulatory considerations and potential risks and challenges, exploring: (i) the organization of individual exchanges and exchange groups, noting the adoption of matrix structures and potential conflicts of interest; (ii) the supervision of multinational exchange groups; and (iii) the potential challenges of supervising individual exchanges within exchange groups.
- Outlines good practices that regulators may consider in the supervision of exchanges, particularly when they provide multiple services and/or are part of an exchange group.
Recommendations
The final report also sets out six good practices that regulators may consider. These cover:
- Organization of exchanges and exchange groups.
- Supervision of exchanges and other trading venues within exchange groups.
- Supervision of multinational exchange groups.