IOSCO seeks feedback on Proposed Good Practices to improve trading venues’ resilience in case of Market Outages

IOSCO has released a Consultation Report on Market Outages, emphasizing operational resilience, a global priority for securities regulators. Recent market disruptions underscore the diverse approaches of trading venues in coordinating recovery pathways for participants and the public.
Market outages, stemming from technical or operational issues, can significantly disrupt trading venues, impacting price discovery and market integrity. Recognizing the potential severity, IOSCO mandated its Committee on Regulation of Secondary Markets (Committee 2) to assess recent outages, focusing on equities listing trading venues but with relevance to non-listing and derivatives venues.
Committee 2 conducted a survey in 2022, covering market outages in member jurisdictions on equities listing trading venues between 2018 and 2022. The resulting Consultation Report builds on past work, offering insights into lessons learned and proposing good practices for enhancing market-wide resilience.
The proposed good practices include:
1. Establishing and Publishing an Outage Plan: This plan should define roles and responsibilities, encompassing communication strategies, reopening tactics, and arrangements for operating a closing auction.
2. Implementing a Communication Plan: Trading venues should promptly communicate outages to market participants and the public, with regular updates on the status and recovery pathway through suitable channels.
3. Timely and Simultaneous Communication on Reopening: Provide clear information to all market participants regarding the reopening of trading, ensuring clarity on order status and allowing sufficient notice before resumption.
4. Publishing Processes for Closing Auctions and Alternative Closing Prices: Include these procedures in the outage plan, sharing them with all market participants during outages.
5. Conducting Lessons-Learned Exercises and Post-Outage Plans: Trading venues should analyze root causes, propose remediation actions, and share findings with relevant regulators. Develop post-outage plans with clear timelines and responsibilities to minimize future incidents.
The Consultation Report, based on a survey of recent market outages, invites feedback on the proposed good practices. While emphasizing equities listing trading venues, the findings extend to non-listing and derivatives venues. Stakeholders are encouraged to submit comments to marketoutages-consultation@iosco.org by 1 March 2024.