ASIC & IOSCO Issue Report on Tackling Retail Market Misconduct

ASIC

The International Organization of Securities Commissions (IOSCO) has today published a report calling for greater international collaboration and cooperation to combat cross-border scams, greenwashing, misconduct, and fraud.

ASIC Chair Joe Longo said, 'Scams, misconduct, and harmful practices targeting retail investors do not respect borders. ASIC co-chaired the task force that wrote the report and supports recommendations to strengthen international cooperation to mitigate cross-border misconduct and share surveillance data and intelligence.'

'In our own domestic experience, we see persistent challenges around the supervision and enforcement of cross-border regulatory issues that cannot be tackled by domestic regulatory bodies alone.'

'Regulators need effective resources, practices, tools, and techniques to promote consumer protection and market integrity, which is supported through participation in critical multilateral forums such as IOSCO.'

Key findings

The report provides a global point-in-time view on the evolving retail trading environment, and outlines a suite of measures for regulators to consider involving:

  • supervisory and enforcement issues emerging from cross-border offerings, and the need to enhance cooperation frameworks
  • conduct and fraud implications emerging from recent crypto asset trading trends
  • increased greenwashing risk and the need to better identify compliance with climate disclosure standards
  • impact of social media and finfluencer activity on retail decisions and behaviour, and the need to heighten regulators' digital presence and strategies
  • the escalation in unlicensed activity and the surge in self-directed online trading.

This analysis will inform ASIC's strategic priorities on retail investor harms concerning crypto-assets, sustainable finance, scams and Australia's design and distribution obligation (DDO) laws.

Read the report on IOSCO's website.

Background

The report was produced by IOSCO's Retail Market Conduct Task Force (Task Force). ASIC co-chairs the Task Force with the Central Bank of Ireland.

Commissioned by the IOSCO Board in 2020, the Task Force's interim report in December 2020 outlined initial observations on the COVID-19 impact on firm and retail investor behaviour, common regulatory challenges and international approaches to dealing with these issues (ASIC 20-338MR).

This was then followed by a March 2022 Consultation Report (ASIC 22-060MR), which saw insights from stakeholders including regulators, market participants, financial consumers, academics and other international bodies inform the Final Report.

International regulatory cooperation across markets and financial services is facilitated by IOSCO's Multilateral Memorandum of Understanding (MMoU) and Enhanced Multilateral Memorandum of Understanding (EMMoU).

ASIC also signed a new Supervisory Multilateral Memorandum of Understanding (SMMoU)at the 47th International Organization of Securities Commissions (IOSCO) Annual Meeting in Marrakech, Morocco on 17 October 2022.

The Supervisory MMoU is between member authorities of IOSCO's Asia-Pacific Regional Committee (APRC). ASIC co-led the development of the MMoU with IOSCO and consulted closely with APRC members on the agreement.

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