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ARTICLE · 23 DECEMBER 2024

IOSCO Releases Consultation On Pre-Hedging Practices

Jones Day
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Pre-hedging has been the subject of significant debate within the financial industry in recent years, with concerns often raised over potential conduct and market integrity issues.

United StatesFinance and Banking
Christopher Arnold
Christopher Arnold
Alban Caillemer Du Ferrage
Alban Caillemer Du Ferrage
Qian Hu
Qian Hu
Peter Petraro
Peter Petraro
Edwin S. Ewing III
Edwin S. Ewing III
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In Short

The Background: Pre-hedging has been the subject of significant debate within the financial industry in recent years, with concerns often raised over potential conduct and market integrity issues. The regulatory landscape remains fragmented, with varied approaches to pre-hedging taken across jurisdictions and asset classes. Against this background, various regulators and standard setters have recently weighed in, including the European Securities and Markets Authority ("ESMA"), which published a report on pre-hedging in 2023, and the Financial Markets Standards Board ("FMSB"), which published a "spotlight review" of pre-hedging case studies this past August.

The Development: The International Organization of Securities Commissions ("IOSCO") recently released a consultation report on pre-hedging, proposing a definition for "pre-hedging" along with recommendations on acceptable practices and the management of conduct risks. It seeks to provide regulators

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