IOSCO Launches Second Securities Markets Risk Outlook 

The International Organization of Securities Commissions (IOSCO) has published the IOSCO Securities Markets Risk Outlook 2014-2015, a forward-looking report focusing narrowly on issues relevant to securities markets and whether these may be, or could become, a threat to the financial system as a whole.

The Outlook has been prepared during a transformative period for global financial markets.

The analysis in this Outlook has benefited from the growing availability of data on securities markets, although data gaps still exist. It also has drawn on the comprehensive inputs from experts in the markets, the academic world and the regulatory community, as well as, other global organisations.

Part I describes selected global trends and potential vulnerabilities in securities market, including the following:

• The importance of securities markets is growing.
• Asset price valuation is increasing, while volatility remain low. A change in the monetary stance will create winners and losers while markets are adjusting to the new reality.
• Derivative markets are still growing and clearing is increasing.
• Some real estate markets and real estate investment trusts could still be vulnerable.
• Capital flows into emerging markets have grown and are affecting securities prices.

Part II identifies the potential systemic risks in or related to securities markets. These potential systemic risks are:

1. The Search for Yield and the Return of Leverage in the Financial System

2. Search for Yield and Volatility Affecting Emerging Markets

3. Risks in Central Clearing

4. The Increased Use of Collateral and Risk Transfer

5. Governance and Culture of Financial Firms
Following the outbreak of the current financial crisis, IOSCO adopted a new strategic direction that emphasized the need for securities regulators to identify, monitor and manage systemic risks.

 

Source: IOSCO- IOSCO Launches Second Securities Markets Risk Outlook 

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