WilmerHale Partner Matthew Kulkin and Associate Caroline Estey authored the article, “IOSCO Reports on Pre‑Hedging and Financial Asset Tokenization,” published in the April 2026 issue of Futures & Derivatives Law Report. The article examines two recent final reports issued by the International Organization of Securities Commissions (IOSCO) addressing pre‑hedging practices and the tokenization of financial assets, both of which carry significant implications for US and global derivatives regulation.
The authors analyze how IOSCO’s principles‑based guidance may shape future regulatory approaches by the Commodity Futures Trading Commission, particularly as regulators seek to harmonize market‑conduct standards while accommodating technological innovation. With respect to pre‑hedging, the article explores IOSCO’s framework for managing conduct and market‑integrity risks amid evolving enforcement activity, emphasizing the need for regulatory clarity. As the authors note, IOSCO’s guidance is intended to ensure that pre‑hedging “is strictly limited to legitimate risk management associated with anticipated client transactions,” while preserving its role as a lawful and important market practice.
The article also addresses IOSCO’s assessment of financial asset tokenization, highlighting emerging trends, risks, and regulatory considerations as distributed ledger technology continues to develop across capital markets. IOSCO observes that while tokenization offers potential efficiencies, “the vast majority of tokenized transactions have been part of experimental or pilot programs,” underscoring both the promise of the technology and the need for careful regulatory oversight.
Read the full article here.
