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21 July 2010

AMF financial services newsletter: AMF supports Commission OTC derivatives proposal


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The AMF and the Banque de France are jointly calling for clearing houses to be given contracts it clears would give it access to central banking refinancing, thereby fur¬ther reinforcing its solidity. According to AMF Chairman Jean-Pierre Jouyet, this will be a tough negotiating point.


The Commission has debated whether European clearing houses should clear any transaction in which at least one of the parties is domiciled in Europe. The AMF supports that proposal.
However, because of this broad definition of clearing requirements, clearing houses, which are the counterparty to each and every market participant, are the focal point for even greater risks. Special measures applicable to their organisation, risk management processes and prudential requirements must therefore be taken to ensure that they are robust. That is the thinking behind the arrangements planned by the Commission, especially for member defaults. The AMF and the Banque de France are jointly calling for clearing houses to be given contracts it clears would give it access to central banking refinancing, thereby further reinforcing its solidity. This will be a tough negotiating point.
There is a unanimous agreement that OTC transactions should be reported to trade repositories in order to stem the risks arising from the lack of transparency in these markets. But opinions differ on the use that should be made of this information and hence on the remit of the repositories. The AMF argues that their duties should take into account the market regulators’ needs for their supervision duties and should not be confined simply to publishing aggregated data, in contrast to the initial proposals put forward by the industry. Regulators must therefore be involved in, or possibly even take charge of, determining the format of the information collated and disseminated by trade repositories. They should also have unconditional access to those data. Accordingly, the repositories should be located and supervised in Europe, possibly even the Euro area.
Concerted action will still be needed to steer OTC transactions back to regulated multilateral trading platforms, which provide the best guarantee of transparency. The MiFID review, all too often identified solely with the regulation of equity markets, provides the right opportunity.


© AMF - Autorité des Marchés Financiers

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