Security & Commodity Exchanges

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Current language: English
Security and commodity exchanges operate marketplaces in the form of physical trading floors or electronic platforms for trading financial securities, commodities, or other financial instruments. Entities in the industry primarily generate revenue from fees on trades and for clearing transactions as well as listing fees. Competition for fees continues to increase with the advent of alternative trading platforms that offer less expensive trades and provide listing services. Recent trends in the regulatory environment suggest a greater focus on transparency, risk management, and market stability. As new policies and market transformations encourage more responsible management of social capital and strong governance, firms that can address all forms of capital—not just financial—will be better positioned to protect shareholder value in the future.

Relevant Issues (3 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.
  • Environment
    • GHG Emissions
    • Air Quality
    • Energy Management
    • Water & Wastewater Management
    • Waste & Hazardous Materials Management
    • Ecological Impacts
  • Social Capital
    • Human Rights & Community Relations
    • Customer Privacy
    • Data Security
    • Access & Affordability
    • Product Quality & Safety
    • Customer Welfare
    • Selling Practices & Product Labeling
  • Human Capital
    • Labor Practices
    • Employee Health & Safety
    • Employee Engagement, Diversity & Inclusion
  • Business Model and Innovation
    • Product Design & Lifecycle Management The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.
    • Business Model Resilience
    • Supply Chain Management
    • Materials Sourcing & Efficiency
    • Physical Impacts of Climate Change
  • Leadership and Governance
    • Business Ethics The category addresses the company’s approach to managing risks and opportunities surrounding ethical conduct of business, including fraud, corruption, bribery and facilitation payments, fiduciary responsibilities, and other behavior that may have an ethical component. This includes sensitivity to business norms and standards as they shift over time, jurisdiction, and culture. It addresses the company’s ability to provide services that satisfy the highest professional and ethical standards of the industry, which means to avoid conflicts of interest, misrepresentation, bias, and negligence through training employees adequately and implementing policies and procedures to ensure employees provide services free from bias and error.
    • Competitive Behavior
    • Management of the Legal & Regulatory Environment
    • Critical Incident Risk Management
    • Systemic Risk Management The category addresses the company’s contributions to or management of systemic risks resulting from large-scale weakening or collapse of systems upon which the economy and society depend. This includes financial systems, natural resource systems, and technological systems. It addresses the mechanisms a company has in place to reduce its contributions to systemic risks and to improve safeguards that may mitigate the impacts of systemic failure. For financial institutions, the category also captures the company’s ability to absorb shocks arising from financial and economic stress and meet stricter regulatory requirements related to the complexity and interconnectedness of companies in the industry.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Security & Commodity Exchanges

Product Design & Lifecycle Management
  • Promoting Transparent & Efficient Capital Markets

    Security and commodity exchanges have a responsibility to ensure equal access to capital markets for all investors. As public markets, these entities play a critical role in efficient capital allocation and the equal application of rules to all participants. In addition, entities must manage the release of public information to prevent asymmetries. Further, with the advent of high-frequency trading there is heightened concern that technology can lead to advantages for certain traders at the expense of others. Information asymmetries that lead to unfair arbitrage could result in litigations and, potentially, regulatory penalties, additional regulatory oversight and compliance costs, as well as reputational damage that may hurt trading volumes and thus revenues. Disclosure of policies relating to information releases, halts of trading, and the risks and opportunities associated with algorithmic or high-frequency trading will allow investors to further understand how security and commodity exchanges protect shareholder value.
Business Ethics
  • Managing Conflicts of Interest

    Security and commodity exchanges are responsible for the oversight of member entities. Specifically, firms in this industry monitor membership information and regulatory compliance to ensure market integrity and transparency. For example, in the U.S., they investigate and prosecute member entities that violate the Securities and Exchange Act. Recent controversies relating to market manipulation, tax fraud, investor protection rules, and anti-trust have raised concern about conflicts of interest that arise due to security and commodity exchanges’ position as self-regulatory organisations (SROs). Rapid innovation in financial markets provides significant opportunities to enhance profitability. However, exchanges must continue to fulfil their responsibilities as SROs to ensure open and fair access to all investors, to publish rules and fees, and to oversee trading. Entities that avoid fraudulent or unethical activities will maintain market integrity, limit reputational damage, and ensure their long-term sustainable growth.
Systemic Risk Management
  • Managing Business Continuity & Technology Risks

    Security and commodity exchanges face increased risks and opportunities associated with information technology. The industry’s central position in the proper functioning of financial markets requires that issues including security breaches and technology errors are managed to prevent market disruptions. As security and commodity exchanges face increased volumes of trading associated with the clearing and execution of derivative trades and increased frequency of cyber attacks, the industry will be exposed to new risks and opportunities associated with its reliance on information technology. Failure to ensure continuity of trading may erode customer trust and result in lower trading volumes, thus loss of revenue. Increased disclosure of efforts taken to prevent these risks, in addition to the current performance, will allow shareholders to accurately assess value.

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Current Industry: Security & Commodity Exchanges

Consumer Goods
Extractives & Minerals Processing
Food & Beverage
Health Care
Renewable Resources & Alternative Energy
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