The world’s securities trading venues and brokerage firms proved resilient during the pandemic, yet a new report from the International Organization of Securities Commissions (IOSCO) points to lessons for enhancing that resilience in future disruptions.
IOSCO’s report on how the pandemic affected trading venues and market intermediaries found that firms were largely able to continue serving clients despite public health restrictions, record trading volumes and extreme market volatility.
At the same time, the industry had to grapple with increased cybersecurity risks, disruptions to certain outsourcing arrangements and an accelerated shift to relying on emerging technologies, the report noted.
More recently, the securities industry has faced new operational challenges due to the fallout from Russia’s invasion of Ukraine, it said.
“Recent geopolitical tensions, disruptions to supply chains and energy shortages have challenged the operational resilience of trading venues and market intermediaries,” IOSCO said, noting that financial and commodity markets have been volatile and cyber risks have increased.
While the global securities industry has largely weathered all of these challenges, IOSCO said the pandemic “highlighted opportunities for regulated entities to learn how to improve their operational resilience.”
The report set out lessons learned from the episode to help enhance the industry’s operational resilience in the face of future threats. Those include “the importance of reviewing, updating and testing business continuity plans, information security risks and maintaining good communication channels between regulators, authorities, regulated entities and third-party service providers.”