Paul Andrews is the Secretary-General of the International Organization of Securities Commissions (IOSCO).
He was the latest guest on the Futures Industry Association (FIA) podcast, FIA Speaks, which is hosted by FIA Chief Executive Officer Walt Luk ken.
The conversation quickly turned to coronavirus and how it was affecting the agenda set by IOSCO set for 2020.
“I would say that did significantly upend the agenda that we set,” Andrews said of coronavirus, “with COVID-19, what we really had to do was stop, take a look back and look at the key issues that COVID 19 is raising.”
Andrews set 2020 had six general priorities.
- Crypto assets
- Artificial Intelligence and machine learning
- Market fragmentation, particularly harmful market fragmentation
- Passive and index investing
- Retail distribution and the digitization of the markets
- Examining leveraged loans
Andrews said after coronavirus hit, IOSCO focused on, “How is market-based finance being impacted, particularly around all of this heightened volatility that we’re seeing, and issues around liquidity as well. So, it’s sort of these market issues that are really focusing our time and looking at things that are impacting pro-cyclicality, things like credit ratings and how they’re going to impact the markets when they see downgrades in the not so distant future.”
Lukken noted the market has been resilient in response to coronavirus, “Given the extreme significant volatility that we’re seeing- you know- you would expect problems and there have been, but for the most part, the markets have done what they’ve been asked to do: discover prices, manage risk, raise capital during a time of need.”
Andrews agreed, “we have come to the conclusion that clearly there has been a lot of stress in the markets, a lot of strains, but you’re right the markets have performed.”
Andrews noted that with investment funds, despite liquidity spikes, “most- you know- investment funds were able to meet redemptions, you’ve seen some inflows in some funds. I look at the central counterparties and they’ve had to issue margin calls, but by and large, those gone without a hitch.”
Andrews explained IOSCO’s rule during the pandemic, “One of the things that we’re doing is we’re playing I think a very, very central role in information role about this crisis, and you know that sounds pretty simple and pretty straightforward but honestly, it’s a crucial component of this crisis because as you mentioned, regulators are taking action on a global level, I mean sorry on a domestic level, and trying to have some level of consistency across the world on some things is not always easy, but one of the roles we play is that we do bring all of those market regulators together and we’ve prepared sort of a COVID-19 repository which is available to all IOSCO members around the world.”
IOSCO is an organization of global securities regulators like the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) in the US and the Financial Conduct Authority in England.
Andrews said that IOSCO operates to encourage three main principles.
- Investor protection
- Fair, efficient and transparent markets
- And contributing to the reduction of systemic risk.