IOSCO Recommends Implementing "Volatility Control Mechanisms"

IOSCO recommended the implementation of "volatility control mechanisms" to help trading venues and regulatory authorities manage extreme volatility and ensure orderly trading.

IOSCO urged trading venues to (i) implement price constraint mechanisms related to order price/volume limits, but otherwise permit continuous trading, (ii) continually calibrate and monitor these mechanisms, and (iii) communicate to regulatory authorities, other trading venues and/or the public when volatility mechanisms are triggered, especially when the same or related instruments are traded on multiple trading venues either in a single jurisdiction or in multiple jurisdictions.

Additionally, IOSCO urged regulatory authorities to monitor the overall volatility mechanism framework by jurisdiction and ensure that trading venues keep relevant records.