What is the International Organization of Securities Commissions (IOSCO)?

The International Organization of Securities Commissions (IOSCO) stands as the preeminent global standard-setter for securities market regulation. Established in 1983, IOSCO has evolved into a powerful force for financial stability, investor protection, and market integrity across the world's interconnected economies.

What Is IOSCO?

IOSCO brings together the world's securities regulators, covering more than 95% of global securities markets across 130+ jurisdictions. Unlike other international financial organizations, IOSCO focuses specifically on securities regulation, creating a specialized forum where regulators can develop coordinated responses to emerging market challenges.

The organization operates through a three-tiered structure:

• The Presidents Committee (all members)

• The Board (key decision-makers)

• The General Secretariat (administrative hub based in Madrid, Spain)

Core Objectives That Drive Global Financial Stability

IOSCO's mission revolves around three fundamental objectives:

1. Protecting investors from misconduct and unfair practices

2. Ensuring markets function efficiently, transparently, and fairly

3. Reducing systemic risk in the global financial ecosystem

These objectives gained renewed importance following the 2008 global financial crisis, which demonstrated how rapidly financial contagion could spread across borders.

The IOSCO Principles: A Framework for Market Regulation

The cornerstone of IOSCO's work is its 38 Principles of Securities Regulation – a comprehensive framework that helps regulators build robust oversight systems. These principles cover:

• Regulatory independence and enforcement powers

• Market surveillance and inspection requirements

• Disclosure standards for securities issuers

• Rules for intermediaries, trading venues, and clearing systems

• Cooperation mechanisms between jurisdictions

Significantly, these principles serve as benchmarks for International Monetary Fund assessments through the Financial Sector Assessment Program (FSAP), creating a powerful incentive for jurisdictions to adopt IOSCO standards.

How do Global Custodians engage with IOSCO?

Global custodians play a critical role in the IOSCO regulatory framework as major financial institutions that safeguard trillions in assets across multiple jurisdictions. These international banks and specialized financial institutions must align their operations with IOSCO principles, particularly those addressing asset segregation, risk management, and cross-border information sharing.

As systemic intermediaries, global custodians frequently engage with IOSCO through industry consultations and working groups, helping shape practical implementation of securities regulations. This relationship became especially significant following the 2008 financial crisis, when IOSCO strengthened requirements for custody functions to protect client assets.

Today, as market infrastructures navigate digital transformation and sustainability demands, global custodians serve as important feedback channels for IOSCO, providing frontline insights into operational challenges while implementing the organization's evolving standards across their vast global networks.

IOSCO's Growing Influence in the Financial Ecosystem

IOSCO's influence has expanded dramatically in recent years through:

1. Enhanced Cross-Border Enforcement Cooperation

The Multilateral Memorandum of Understanding (MMoU) facilitates information sharing and evidence gathering across borders – essential tools in combating financial crimes that increasingly transcend national boundaries. The Enhanced MMoU, introduced in 2017, expanded these powers to address technological developments in market misconduct.

2. Response to Financial Innovation

IOSCO has positioned itself at the forefront of emerging market challenges:

• Crypto-assets and tokenization: Developing frameworks for digital asset markets

• Sustainable finance: Creating standards for ESG disclosures

• Market fragmentation: Addressing regulatory inconsistencies across jurisdictions

• Artificial intelligence: Examining implications for market efficiency and fairness

3. Coordination with Global Financial Bodies

IOSCO works closely with the Financial Stability Board (FSB), Basel Committee, and other international organizations to ensure coherent approaches to financial regulation. This collaboration became particularly vital in the pandemic response, with IOSCO playing a key role in maintaining market resilience during unprecedented volatility.

Why IOSCO Matters for Different Stakeholders

For Investors

IOSCO's work translates into stronger protections, greater transparency, and more reliable markets. Its emphasis on disclosure requirements and conduct standards helps create environments where investors can make informed decisions with confidence in market integrity.

For Market Participants

Financial firms benefit from regulatory consistency and predictability across markets. IOSCO's standards reduce compliance complexity in cross-border operations while promoting competitive fairness through level playing fields.

For Regulators

IOSCO provides essential tools for regulatory effectiveness – from technical assistance programs to information-sharing mechanisms that enhance enforcement capabilities. The organization's peer review processes also help identify regulatory gaps and implementation challenges.

Future Directions: IOSCO's Evolving Role

Looking ahead, IOSCO is likely to expand its focus on several critical areas:

1. Digital transformation of markets, including DeFi, crypto-assets, and blockchain applications

2. Climate and sustainability risk monitoring and disclosure standards

3. Operational resilience amid cyber threats and market fragmentation

4. Retail investor protection in increasingly complex and accessible markets

As global finance continues its rapid evolution, IOSCO's role as the coordinator of securities regulation will remain essential for maintaining stability while enabling innovation.

The organization's ability to bring diverse regulatory approaches into alignment represents one of the most successful examples of international financial cooperation – demonstrating how collaborative oversight can strengthen rather than stifle market development.

For those seeking to understand the forces shaping global financial markets, IOSCO provides a window into how the international community balances investor protection, market efficiency, and systemic stability in an increasingly interconnected world.