Principles for the Regulation and Supervision of Commodity Derivatives Markets

The Board of the International Organization of Securities Commissions (IOSCO) published a revised version of its 2011 Principles for the Regulation and Supervision of Commodity Derivatives Markets. The aim of the revision is to ensure that these Principles continue to provide a resilient framework for the regulation and oversight of the commodity derivatives markets.

While the Principles reflected the characteristics of commodity derivatives markets in 2011, these markets have continued to evolve over the past decade, spurred by various market developments and international events in the form of external disruptions, such as the COVID-19 pandemic and the Russia-Ukraine conflict.

The 24 revised Principles seek to support the physical commodity derivatives markets in providing their fundamental price discovery and hedging functions, while operating free from manipulation and abusive trading schemes. The update include Principles relating to: (1) The role of price reporting agencies in price assessments, acknowledging the potential application of more recent work in oil markets to other commodity derivatives markets; (2) The increased importance of high-quality data and information in price discovery and risk management; (3) Dealing with unexpected disruptions in the market, pertinent to recent events including the COVID-19 pandemic and geopolitical events in Ukraine and elsewhere; (4) Direct access to commodity derivatives markets by market participants; (5) High-frequency and algorithmic trading; and (6) Promotion of investor education.