The International Organization of Securities Commissions Requests Feedback Related to Conflicts of Interest and Blockchain in Debt Capital Raising

According to Law360, the board of the International Organization of Securities Commissions (“IOSCO”), an international collective of securities regulators, recently released a report that asks for feedback from its members related to conflicts of interest and the potential benefits and risks of using blockchain in debt capital raising.  The report is the second part of a two-stage project on conflicts of interest in capital raising.  The first stage dealt with conflicts in the equity capital raising process.

 The conflicts of interest at issue pertain to market intermediaries’ roles in the fundraising process.  According to the report, a survey conducted last year revealed the existence of actual or potential conflicts that were attributed to market intermediaries serving multiple roles in the fundraising process.  Purportedly, the most evident conflicts involved the quality of information available to investors, the allocation of debt securities, and the pricing of debt securities and related risk management transactions.  The IOSCO’s report proposed guidance to help its members address these risks. 

 The report also seeks members’ comments on the potential benefits and risks of using blockchain technology in bond issuances.   The report contemplates using this technology to “disintermediate” some parts of the debt capital raising process and thereby remove the associated conflicts of interest.