On 20 September 2018, the International Organization of Securities Commissions (IOSCO) published a final report on retail OTC leveraged products (the Report), which provides measures for securities regulators to consider when addressing the risks arising from the marketing and sale of OTC leveraged products to retail investors.
The Report provides three ‘toolkits’ containing guidance and measures for IOSCO members on ways to mitigate harm to retail investors in the sector. The three toolkits respectively set out:
- policy measures with guidance for the regulation of the offer and sale of the relevant products by intermediaries;
- ways for IOSCO members to design investor education programmes to inform retail investors about the nature and risks of the relevant products; and
- enforcement approaches and practices to address and mitigate the risks posed by unlicensed firms offering the relevant products to retail investors.
IOSCO members are encouraged to consider adopting one or several of these measures, in accordance with their legal and regulatory framework and the specific risks they have identified. The toolkits within the Report do not mandate regulatory action as not every measure described would be appropriate to each IOSCO member jurisdiction.