TWSE Market Insights

＜中文版＞

The Mid-Year Meeting and Training Seminar of the International Organization of Securities Commission (IOSCO) Affiliate Members Consultative Committee (AMCC) was held in London, UK, from October 8 to October 10, 2025. The meeting was hosted by the IOSCO General Secretariat , with an agenda that covered progress in policy work, regulatory practices, and multiple thematic discussions.

1. Liquidity Risk Management

In May 2025, IOSCO revised its 2018 recommendations, proposing a fund classification system, strengthening anti-dilution tools (such as swing pricing, dual pricing, and redemption fees), and expanding the liquidity toolkit (including soft closures and redemption gates). It is also planning a global inventory by 2026 and a review of adoption effectiveness by 2028.

2. Pre-hedging

This refers to the practice where dealers, before formally accepting a client's order, execute hedging or risk management operations in the market based on the client's disclosed potential trading intention, in order to avoid bearing the risk of price fluctuations themselves. While this helps to lower the risk of price jumps borne by dealers, making subsequent quotes more efficient and providing more liquidity, if executed improperly, it might be seen as "trading ahead" using prior knowledge of a client's intentions or causing market prices to be detrimental to the client. The Committee is developing a high-level definition and recommendations to enhance information disclosure and operational consistency.

3. Artificial Intelligence (AI)

IOSCO reviewed existing recommendations and discussed new risks posed by Generative AI. The Board has approved three AI-related tasks, planning to build a regulatory toolkit, implement AI governance frameworks for financial institutions, and promote investor education to prevent investment scams utilizing AI.

4. Tokenization

The FinTech Working Group noted that most tokenization projects are currently still in the pilot stage, with applications mainly concentrating on fixed-income products (such as bonds) and Money Market Funds. Regulatory authorities should primarily focus on capacity building and continuous monitoring at this stage.

The Market Fragmentation Report was presented by Allison Parent on behalf of the Global Financial Markets Association (GFMA). It highlighted the increasing importance of global standard consistency and cross-border mutual recognition mechanisms amidst innovations such as Artificial Intelligence, Distributed Ledger Technology (DLT), and quantum computing. It also called for a non-politicized respect mechanism and a clear timetable.

It was noted at the meeting that gaps in cross-border regulatory norms still exist. Global financial institutions must contend with inconsistent regulatory standards and reporting requirements across different jurisdictions, which may lead to higher compliance costs and market discontinuities. Discussions emphasized that national regulatory authorities should strengthen dialogue and mutual recognition mechanisms to mitigate the risks posed by regulatory fragmentation to global capital flows.

The Financial Stability Board (FSB) is a global financial regulation and policy coordination body established by the G20. It is primarily responsible for monitoring global financial system risks, promoting consistency in cross-country regulatory standards, and playing a core coordination role in major financial crises or systemic reform issues. The FIRE framework proposed by the FSB aims to establish a cross-border interoperable standard for reporting financial operational incidents. It adopts a phased reporting and machine-readable format design to enhance the efficiency of incident reporting and facilitate information exchange among supervisory authorities. The framework emphasizes that reporting can be initiated early during the occurrence of a significant incident, thereby strengthening the overall operational resilience of the financial system.

Bailey, Governor of the Bank of England and also Chair of the FSB, pointed out that the financial stability framework needs to cover both banks and non-banks, and emphasized the importance of payment infrastructure and trust in money. Regarding new types of payment instruments such as stablecoins, Central Bank Digital Currency (CBDC), and tokenized deposits, he stated that clear supervisory boundaries and resolution mechanisms should be established to ensure that technological innovation does not undermine the core credibility of the monetary and financial systems.

This training seminar focused on crypto assets. Three roundtables invited 6 to 8 regulatory representatives and industry experts, using scenario-based topics to drive discussions on risks and regulatory practices:

1. The Impact of Smart Contract Vulnerabilities Exploited on Layer-1 Platforms

This scenario discussed situations where vulnerabilities in smart contracts at the Layer-1 blockchain level are exploited, leading to fund drain and a crisis of trust. The impact is not limited to a single protocol but could involve the entire blockchain ecosystem and other DeFi or tokenized applications that rely on that infrastructure. The discussion focused on the speed of risk transmission, real-time monitoring capabilities, and regulatory considerations regarding the threshold for scrutiny of underlying technology.

2. The Impact of a De-pegging of a Top Stablecoin

This issue addressed the instant de-pegging of major global stablecoins from their pegged price, such as deviation from the US dollar, due to market pressure or changes in reserve assets, causing volatility in capital flows and loss of confidence. This, in turn, affects DeFi liquidity, quoting mechanisms, and cross-border payment scenarios. Participants discussed whether regulation should strengthen reserve transparency, clearing mechanisms, and mechanisms for controlling funds after a transaction is unwound.

3. Resolution Challenges Posed by the Failure of Systemically Important Digital Asset Trading and Custody Platforms

This scenario explored the sudden collapse of a large digital asset trading and custody platform due to internal governance failures or liquidity depletion, impacting market confidence and the safety of investors' assets, and raising issues of cross-border legal jurisdiction, asset recovery procedures, and regulatory cooperation. The focus of discussion included pre-failure recovery and resolution plans and whether regulators should include such platforms under supervision analogously to traditional financial systemic institutions.

Overall, it is clear from this IOSCO AMCC meeting that the global regulatory focus is converging on three major themes : "AI and Tokenization Governance," "Standardization of Cross-border Incident Reporting," and "Non-bank Financial and Digital Asset Risk Frameworks". Future financial market regulation will also place greater emphasis on "real-time risk detection" and "cross-border contingency coordination capabilities".

For financial participants, this is no longer just policy observation but a practical and sensitive direction that requires early preparation. Whether it is AI governance, compliance standards for tokenized assets, or operational resilience and incident reporting capabilities, these are common focal points for establishing global market trust.