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A review of equity trading regulation around the world finds that most regulators have adopted principles to guard against abusive trading, but that there are gaps, particularly in emerging and frontier markets.

The International Organization of Securities Commissions (IOSCO) published a report today that details how well regulators in 40 jurisdictions have implemented its principles for secondary market regulation. IOSCO’s principles in this area cover basic elements such as market oversight and surveillance, transparency requirements, and measures for catching and punishing abusive trading.

Overall, the report finds most jurisdictions have done a good job of implementing regulations that adhere to IOSCO’s standards. In certain markets, however, it also found gaps: weak oversight capabilities (such as a lack of adequate trading control mechanisms, no automated pre-trade controls, and no mechanisms for reviewing trade matching algorithms); inadequate enforcement sanctions for abuses such as market manipulation and illegal insider trading; and weaknesses in risk management, such as reporting of short selling and large trader positions in commodity derivatives markets.

The report makes several reform recommendations to address the gaps that are identified in the report. Most of the shortcomings uncovered in the report involve emerging and frontier markets, such as Saudi Arabia, Mexico, Morocco, Albania and the Bahamas.

IOSCO’s report doesn’t call for reforms in the two Canadian markets that participated in the review—Ontario and Québec. It notes that the market surveillance system in Canada—IIROC’s Surveillance Technology Enhancement Platform system—has been upgraded to enhance its data mining, visualization and reporting capabilities, and is employing new tools, including machine learning and artificial intelligence.