CEA: OTC derivatives regulation must reflect risk profiles
17 December 2010
The CEA is also concerned with ensuring that insurers are not deterred from using hedging techniques by a one-size-fits-all regulation that is insufficiently tailored to long-term investors.
Over-the-counter (OTC) derivatives are an important hedging tool for insurers. To guarantee efficient, safe and transparent financial markets for investments, insurers support central clearing of OTC derivatives.
The CEA, however, believes that the proposed new EC Regulation must not unintentionally create new systemic risks. The safeguards and facilities in the future clearing framework should therefore be carefully considered.
As currently drafted, the Regulation proposal would place disproportionate costs on long-term investors and these would ultimately be passed on to policyholders.
© CEA - Comité Européen des Assurances
