With just a year before the end-2012 implementation deadline set by the Group of 20 for the reforms, the Financial Stability Board noted that "few FSB members have the legislation or regulations in place to provide the framework for operationalising the commitments". The board said it was understandable that smaller economies might be waiting for the two key players in the market - the European Union and the US - to set out their frameworks before developing their own.
"Nevertheless, it is important that all jurisdictions advance development of their legislative and regulatory frameworks as far as they are able, even before finalisation of the US and EU regimes, to be in a position to act expeditiously once rules are finalised in these two largest OTC derivatives markets", it said. The over the- counter derivatives reforms are part of a broader thrust by global regulators to tighten up financial services and banking practices following the huge financial damage wrought during the crisis. In October 2010, global regulators made 21 recommendations to reform derivative trading, including calling on authorities to increase the amount of standardisation in the market, with a central clearing system to ensure orderly settlement of trades.
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