IOSCO focuses on social media for market intelligence, trends

NEW DELHI: To promote market efficiency and understand investor behaviour, the global grouping of capital market regulators IOSCO will focus on the social media which could also serve as a tool for gathering market intelligence and identifying trends.

Securities and Exchange Board of India ( Sebi) is a member of the International Organisation of Securities Commissions.

Issues related to behavioural economics and social media in the context of securities market were discussed by board members of IOSCO during their meeting last month in Montreal.

The influence of social media on capital market has been on the rise as was evident from a recent fake message on microblogging site Twitter that led to a sharp sell off in the American stock market.

According to IOSCO, members have agreed that the "social media could serve as a vehicle to influence investor behaviour, gather market intelligence and identify market trends".

Noting that the social media could help in furthering the grouping's efforts to be pro-active and forward-looking, IOSCO said in a statement on Monday that its new panel on retail investors would examine the issue.

In April, a fake tweet saying that US President Barack Obama was injured in an explosion at the White House resulted in panic selling of American stocks with estimates that market capitalisation of about USD 130 billion was wiped off.

Meanwhile, the committee on retail investors would look to ensure that IOSCO takes a consistent and comprehensive approach to retail investment products and services.

"By focusing on investor education, it (committee) will enable IOSCO members to share their experiences and build expertise globally in financial literacy," the statement said.

IOSCO's members regulate over 95 per cent of the world's securities markets.