Principles for the Regulation and Supervision of Commodity Derivatives Markets

International Organisation of Securities Commissions (IOSCO)

September 2011

http://www.iosco.org/library/pubdocs/pdf/IOSCOPD358.pdf  

These principles are aimed at ensuring a globally consistent approach to the oversight of commodity derivatives markets which will deliver effective supervision, combat market manipulation and improve price transparency.

The principles address the following areas:

Design of Physical Commodity Derivatives Contracts - focused on establishing design concepts for futures contracts;

Surveillance of Commodity Derivatives Markets - including the basic framework for surveillance, powers needed to access information for both on-exchange, OTC, and cash market transactions, emphasises the importance of monitoring large positions;

Disorderly Markets -sets out the powers needed by market authorities to intervene in the markets to address disorderly conditions; 

Enforcement and Information Sharing - addresses the basic framework for a successful enforcement program, including required powers; and

Enhancing Price Discovery and Transparency - how to improve this to the public and regulators through the publication of open interest according to certain categories of traders, the establishment of formalised systems to allow regulators to impose position limits and the promotion of the reporting of OTC derivatives to trade repositories.