FSB publishes reports on implementation of OTC derivatives market reforms
08 April 2014
The Financial Stability Board (FSB) published the 7th of its semi-annual progress reports on implementation of OTC derivatives market reforms.
To improve transparency, mitigate systemic risk, and protect against market abuse, G20 Leaders agreed in 2009 to a comprehensive reform agenda for OTC derivatives markets:
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all OTC derivatives contracts should be reported to trade repositories (TRs);
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all standardised contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties (CCPs);
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non-centrally cleared contracts should be subject to higher capital requirements and minimum margining requirements should be developed. The report published today finds that substantial progress has been made toward meeting the G20 commitments, through international policy development, jurisdictions’ adoption of legislation and regulation, and expansion in the use of market infrastructure.
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Jurisdictions’ Implementation of reforms: More than three-quarters of FSB member jurisdictions have regulations in place to require transactions to be reported to trade repositories. Although legislative frameworks are in place to support increased use of exchanges and trading platforms for OTC derivatives contracts, where appropriate, there continues to be differences across jurisdictions in their approaches and timing of implementation in this reform area.
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International standards: Effective implementation of reform will need satisfactory resolution of cross-border regulatory issues. The OTC Derivatives Regulators Group has reached additional understandings to improve the cross-border implementation of OTC derivatives reforms.
The new report discusses areas where further work is needed to complete the reforms and achieve the G20 objectives, including for authorities to:
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put in place their remaining legislation and regulation promptly and in a form flexible enough to respond to issues of cross-border consistency;
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provide clarity on their processes for making equivalency or comparability decisions (including whether additional authority may be needed to defer to other jurisdictions’ regimes, where appropriate) –the FSB will report to the G20 by September on jurisdictions’ frameworks in this regard; and
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continue to closely coordinate and cooperate as needed to promptly seek to resolve cross-border regulatory issues when they are identified.
The FSB will continue to monitor jurisdictions’ implementation of the OTC derivatives reform programme, as well as the extent to which the implemented reforms meet the G20’s underlying goals of improving transparency, mitigating systemic risk, and protecting against market abuse. The FSB will publish its next progress report ahead of the November G20 Leaders’ Summit.
Full press release
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