August 1, 2018
Joint Press Release with the Ministry of Agriculture, Forestry and Fisheries
On July 4, 2018, the International Organization of Securities Commissions (IOSCO),* a global organization consisting of securities regulatory authorities and securities exchanges in countries and regions around the world, conducted research on the operation of storage infrastructures that have potential impacts on the price formation of commodity derivatives markets and other issues and released a consultation report that recommends introduction of good and sound practices into the operation of these infrastructures.
*Note: The IOSCO member organizations include the Ministry of Economy, Trade and Industry (METI), the Financial Services Agency (FSA), and the Ministry of Agriculture, Forestry and Fisheries (MAFF), as well as the Commodity Futures Trading Commission (CFTC), the United States, and the Financial Conduct Authority, the United Kingdom, among others.*
The report, titled “The Impact of Storage and Delivery Infrastructure on Commodity Derivatives Market Pricing” released by the IOSCO in May 2016, pointed out that certain practices surrounding the operation of storage infrastructures have the potential to affect the price formation of commodity derivatives markets. In response, the IOSCO released a consultation report that recommends introducing good and sound practices (conduct rules) into the operation of storage infrastructures with the aim of improving transparency and soundness, and decided to broadly call for comments on the report.
2. Outline of the report
The consultation report provides recommendations for introducing conduct rules for addressing case examples in five fields, which were highlighted in the Report on the Impact of Storage and Delivery Infrastructure on Commodity Derivatives Market Pricing, i.e., oversight, transparency, fees and incentives, conflicts of interest and operations, as they relate to three items, i.e., storage infrastructures, derivatives markets and authorities over derivatives. These conduct rules show good and sound practices categorized into three types: a. preventative practices that seek to establish good governance and dispute resolution procedures in an effort to avoid issues, b. monitoring practices that seek to address issues as they arise in order to mitigate deleterious effects; and c. punitive practices which address, through resolution, behaviors after the fact.
If you wish to make any comments on the report, please submit them to the IOSCO in the form shown in the report.
For the text of the report, see the website below:
Division in Charge
Office of Director for Commodity Market, Commerce and Service Industry Policy Group