At the global level, OTC derivatives regulation is being undertaken by CPSS and IOSCO and focuses on efforts to update and strengthen standards for CCPs, CSDs, payment systems and the treatment of trade repositories.
The revised Principles of the group were published earlier this year for public consultation and it is anticipated that they will be finalised in late 2011.
At the national level, initial proposals regarding OTC derivatives market regulation have been initiated in 2010, especially in the US and in Europe. 2011 will now see the finalising of these proposals and partial implementation in the US. In 2012, many of the final rules will then be implemented globally.
Highlights:
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In 2009, G20 leaders agreed that all standardised OTC derivatives should be cleared through CCPs, non-centrally cleared contracts should be subject to higher capital requirements, and all OTC derivatives should be reported to trade repositories by the end of 2012.
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Now, OTC derivatives regulations in the EU and the US are taking shape.
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Elsewhere in the G20, the process to introduce OTC derivatives regulation has just started with rule-makers apparently waiting for US and EU rules to set the benchmarks.
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Regulatory initiatives in the US and the EU come with a lot of similarities and only few differences.
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For non-financial companies extensive exemptions have been defined.
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Overall, regulations seem to be shaped in a sensible manner but will nonetheless affect the financial industry substantially.
Full report
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