Regulators and industry players differ over the key risks facing securities markets, according to the latest report from the research department of the International Organization of Securities Commissions (IOSCO).
IOSCO’s research department published the results of its annual survey on market trends and emerging risks, which was conducted in March, noting that responses to the survey differ by the type of respondent. “Regulators see risk emanating from illegal conduct, corporate governance, financial risk disclosure and benchmarking issues, while market participants are more concerned with risk arising from the search for yield, resolution and resolvability plans, central counterparties (CCPs) and market fragmentation,” it says.
The survey also found that respondents see very few risks emanating from within securities markets. Instead, the primary concern for securities markets is that they could transmit and/or amplify shocks from outside.
“Respondents thought the fallout from banking vulnerabilities and capital flow volatility could have considerable consequences for the real economy. Concerns about trends in the housing market continue to increase,” it notes.
However, worries about other recent risks, such as sovereign debt and the global economic slowdown, have declined significantly as the developed economies slowly return to economic growth, it says. “This shows how quickly the perception of risks can change,” it says.
“Other noteworthy trends include an increase in the recognition that cybercrime or cyber‑related issues could be a threat to systemic stability; financial risk disclosures and resolution and resolvability frameworks,” it adds.