At a recent meeting in Madrid, the Board of the International Organization of Securities Commissions (IOSCO) agreed to "intensify" its work on how to make the most of opportunities arising from "technological change" whilst "mitigating the risks" at a recent meeting in Madrid, a statement issued by the organisation said.
A committee within IOSCO is already engaged in work looking into financial technology and digitisation.
IOSCO is a forum for international cooperation on regulatory matters affecting the world's securities and futures markets. It is made up of financial regulators from over 100 different countries that together regulate over 90% of the world's securities markets.
IOSCO said that securities regulators have held round table discussions on "the challenges and opportunities posed by fintech and – more particularly – distributed ledger technology – or blockchain". IOSCO's Board has "agreed on further research on financial technology subsectors with particular relevance for securities regulators, including blockchain", it said.
The operators of stock exchanges in London, New York and Tokyo are among those already looking at whether blockchain technology could be used to facilitate trading. Blockchain is best known as the technology that underpins trading involving the digital currency bitcoin, however it has many other potential uses. It is a type of database and, using cryptography, can be operated as a system of public ledger for recording information, such as the transfer of assets between two or more parties.
IOSCO also said it intends to look in more detail at the "use and regulation" of so-called 'robo advice' tools. It said there is also support for "further work on … understanding the risks arising from the use of cloud technology".
At its meeting the Board of IOSCO also discussed a report into how the body is "addressing the challenges of cyber risk", it said. The report is expected to be published in the coming weeks.
An IOSCO spokesperson told Out-Law.com that its Growth and Emerging Markets Committee had held its first ever cyber attack simulation in January. The test exercise involved participants in more than 40 countries and "focused specifically on the role of securities regulators when dealing with cyber attacks on regulated entities", they said.
"The whole exercise was aimed at raising awareness of the consequences of the evolving cyber-threat and to discuss effective responses to the threat," the spokesperson said.
"The conclusions drawn were: the need to have a clear, well-defined and institutionalised crisis management plan in place; to balance a proactive and reactive regulatory approach to respond and facilitate recovery in the event of a major cyber breach affecting regulated entities; importance of cross-border cooperation and information sharing; and importance of effective and clear communication with the general public, investors, affected entity, other market participants, law enforcement and other agencies and bodies," they said.