What We Do

The interests and concerns of the IIF and its members do not stop at banking and insurance. Given the interconnectedness of financial markets both across sectors and globally, a stable and efficient financial system requires well-run, safe, and efficient financial markets subject to consistent and coordinated regulation and supervision. It is critical that regulation and supervision do not deliberately or inadvertently displace risks from one part of the financial system to another.

With this in mind, the IIF’s Cross-Border Securities Working Group monitors international and national developments in securities market regulation of interest or relevance to members, and where necessary, acts to promote consistent and proportionate global regulation and standards. Of crucial importance here is strong engagement with the International Organization of Securities Commissions (IOSCO).

The financial system also needs to be supported by strong, sound and effective financial market infrastructure. This infrastructure creates a high degree of interconnectedness; direct and indirect connections between market participants. This can be hugely beneficial in dispersing risk and ensuring efficiency but can also carry significant risks. Equally, market infrastructure is highly international in nature, so artificial distinctions across borders are likely to invite arbitrage and create market distortion.

The IIF’s Infrastructure Working Group works to mitigate these risks and to engage with national and international regulators on regulation affecting them. It has been particularly active on the issue of the procyclicality of collateral and on ensuring that central counterparties (CCPs) are regulated in an internationally consistent and convergent way that ensures their safety and soundness as well as the mitigation of systemic risk.

Current workflow

Together with a number of other associations, in March 2011, the IIF submitted a written contribution to IOSCO on the subject of suitability requirements for market intermediaries in relation to investors. The contribution encourages it to take a careful, targeted and proportionate approach.

The Infrastructure Working Group is currently engaging with ISDA and the Committee on the Global Financial System (CGFS) on how to mitigate negative effects from the procyclicality of collateral. It is also considering how best to respond to the consultative report on “Principles for financial market infrastructure” recently issued by CPSS and IOSCO.