FT: Push to regulate derivatives is under strain

08 July 2011

The global deal to regulate opaque derivatives markets is under strain, according to officials and bankers, amid increased tensions between countries on the shape of the new regime.

The new rules are supposed to be in place by the end of next year, but there are increasingly fractious disagreements over the detail and timing. Edouard Vieillefond, managing director in the regulation policy and international affairs division at France’s Autorité des Marchés Financiers, said: “On 90 per cent of the rules we agree with the US. But if we don’t have the same list of derivatives for central clearing, the same rules for margining and capital including the same capital and collateral requirements for uncleared bilateral derivatives, it won’t be manageable. We need to converge”.

Non-US officials and bankers are frustrated at what they see as an implicit threat from Washington that it could demand that the likes of Société Générale and Deutsche Bank follow American rules worldwide if they want to retain access to US markets. The approach from the US, which passed derivatives reform as part of last year’s Dodd-Frank Act, limits room for compromise. “Part of the problem is the US rushed out their legislation and now it is in the business of pushing everyone else to follow suit”, said Anthony Belchambers, chief executive of the London-based Futures and Options Association.

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