On 1 March FIA responded to a public consultation issued by the International Organization of Securities Commissions outlining a proposed set of “good practices” to promote the integrity and orderly functioning of voluntary carbon markets (VCMs). In the response, FIA commended IOSCO for fostering a much-needed dialogue on the issues surrounding the development of VCMs. FIA emphasized that listed derivatives markets have a strong track record in scaling markets for a variety of asset classes and product types, and expressed optimism that collaboration among exchanges, market participants, regulatory authorities, and industry-led efforts to bring greater integrity to carbon markets, will contribute positively to the development of robust VCMs.
FIA’s consultation response:
- Highlights the important role that voluntary carbon credit (VCCs) derivatives are playing in helping the global economy navigate and manage risks associated with the energy transition.
- Emphasizes FIA’s support for the many public and private-sector initiatives that are aiming to bring increased standardization and integrity to VCCs and related carbon credit projects.
- Urges IOSCO to encourage market regulators to focus on market integrity with existing authorities and mandates, and leave issues related to environmental integrity to an environmental regulator or oversight body with experience in determining whether carbon credit characteristics are valid.
- Acknowledges that IOSCO has carried forward many of the recommendations FIA made in its response to IOSCO’s November 2022 Discussion Paper.
- Generally, supports the Good Practices identified by IOSCO that may be helpful to relevant regulators and other authorities, and market participants interested in promoting VCM integrity and helping to overcome some of the present limitations in these markets.
