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In the report Commodity Storage and Delivery Infrastructures: Good or Sound Practices, published for consultation today, IOSCO proposes the adoption of the good or sound practices by all relevant storage infrastructures, their oversight bodies and financial regulators in IOSCO member jurisdictions, as appropriate to their role and activities.

IOSCO believes that the implementation of these practices will lead to a more transparent and robust environment for the physical storage and delivery of commodities, producing benefits for all commodity market participants.

The overarching objective of the good or sound practices is to create a framework that incentivises the market to adopt best practices and self-correction, rather than one that prohibits certain behaviours.

The report builds on IOSCO's 2016 report The Impact of Storage and Delivery Infrastructure on Derivatives Market Pricing, which identified certain commodities storage and delivery situations that have the potential to affect derivatives pricing if not properly addressed. These practices fall into five broad areas: oversight, transparency, conflicts of interest, fees and incentives, and operations.

Today's report sets out various potential good or sound practices to address the issues previously identified in each of the five areas. The report provides examples of Good or Sound Practices of the following types:

a. Preventative practices that seek to establish good governance and dispute resolution procedures in order to avoid issues;

b. Monitoring practices that seek to identify and address issues as they arise to mitigate deleterious effects; and

c. Punitive practices which address, through resolution, certain behaviours after the fact.

IOSCO welcomes comments on the draft Good or Sound Practices which should be submitted on or before 29 August.

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