FSB Report Highlights OTC Reform Challenges
The FSB releases semi-annual reports on legislative and practical progress on the reform for Group-of-20 (G20) leaders. In 2009, the G20 mandated that by the end of 2012, all OTC contracts should be reported to trade repositories, all standardized contracts should be traded on electronic platforms or exchanges and centrally cleared, and that non-centrally cleared contracts should be subject to higher capital requirements.
In its report, the FSB says that around 75 percent of its member jurisdictions have plans to put frameworks in place to facilitate reporting to trade repositories, while most of the largest derivatives markets have central clearing in place. The Board highlighted cross-border regulatory agreements signed of late, such as those between the US Commodity Trading Futures Commission (CFTC) and foreign regulators, as being a key mark of progress. Standards for infrastructures such as central counterparties (CCPs)─the middlemen through which trades are cleared─are underway, and the report acknowledged concerns over these utilities becoming "too big to fail".
Further Work
The report also notes several areas that need further progress to fulfil G20 expectations, however. Increasing the use of platforms for trading standardized contracts, along with central clearing, the establishment of resolution mechanisms for utilities such as CCPs and greater clarity from regulators are among the key points. On the subject of authorities, the FSB says that they need to have mechanisms and technology in place to use the data reported to trade repositories, and that extended discussions are needed on cross-border cooperation when it comes to regulatory regimes.
On the participant side, the FSB says that most are making good progress, and singles out the use of trade reporting and central clearing in interest-rate and credit-default swap transactions, which are among the most electronic in nature for OTC instruments.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Bank-led consortium takes aim at position reporting
Five banks, including Barclays, BNP Paribas, Goldman Sachs and HSBC, have joined forces to mitigate interpretation and implementation errors in position reporting disclosures.
Verafin launches genAI copilot for fincrime investigators
Features include document summarization and improved research tools.
Waters Wrap: Open source and storm clouds on the horizon
Regulators and politicians in America and Europe are increasingly concerned about AI—and, by extension, open-source development. Anthony says there are real reasons for concern.
DSB says industry is ready to meet UPI mandate ahead of deadline
The Unique Product Identifier will be required for certain OTC derivatives in the EU at the end of April, following US adoption in January.
‘Very careful thought’: T+1 will introduce costs, complexities for ETF traders
When the US moves to T+1 at the end of May 2024, firms trading ETFs will need to automate their workflows as much as possible to avoid "settlement misalignment" and additional costs.
Court case probes open-source licenses as movement stands at crossroads
The Software Freedom Conservancy’s lawsuit against TV-maker Vizio begins trial in California, raising questions about open-source licenses and the risks posed by adhering to them.
Waters Wavelength Podcast: Countdown to T+1
DTCC’s Val Wotton joins the podcast this week to discuss the impending move to T+1 in the US.
Consolidated tape hopefuls gear up for uncertain tender process
The bond tapes in the UK and EU are on track to be authorized in 2025. Prospective bidders for the role of provider must choose where to focus their efforts in anticipation of more regulatory clarity on the tender process.
Most read
- Waters Wavelength Podcast: S&P’s CTO on AI, data, and the future of datacenters
- Chris Edmonds takes the reins at ICE Fixed Income and Data Services
- Waters Wrap: GenAI and rising tides