IOSCO Publishes Final Report on Compliance Carbon Markets

The International Organization of Securities Commissions (IOSCO) has released its final report on Compliance Carbon Markets (CCMs), which aims to provide guidance and support to IOSCO members as they establish new CCMs or enhance existing ones. Rodrigo Buenaventura, Chairman of the Spain CNMV and Chair of the IOSCO Sustainable Finance Taskforce (STF) said the report intends to facilitate the implementation of CCMs across IOSCO-member jurisdictions in a swift and efficient manner”, building on the experiences of more advanced jurisdictions to give other governments a solid starting point to avoid repeating past mistakes. The report delves into the distinctive characteristics of CCMs compared to traditional financial markets and offers a comprehensive set of recommendations to ensure the efficiency and integrity of CCMs, drawing on the experiences of other markets. As CCMs are overseen by various types of authorities responsible for regulating specific aspects, the report provides flexibility to jurisdictions and regulatory authorities based on their legal mandates when establishing CCMs. Verena Ross, co-Chair of the STF Carbon Markets Workstream and Chair of the European Securities and Markets Authority (ESMA), said: “Sound, efficient and compliant carbon markets can be a key tool to help jurisdictions meet their climate goals. Building on the experience of financial markets regulators at IOSCO, this report will support the continued development of these markets, that can contribute to reducing greenhouse gas emissions globally. The report includes 12 recommendations that cover primary and secondary market functioning. Primary market recommendations focus on transparency, predictability, and market structures related to allowance allocation mechanisms, market stability mechanisms, and primary market access. Secondary market recommendations emphasise market integrity, transparency, and structure. Additionally, the report incorporates applicable IOSCO Objectives and Principles of Securities Regulation and IOSCO Principles for the Regulation and Supervision of Commodities Derivatives Markets. 

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