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The proposed regulatory treatment of clearing houses shows how Europe's regulatory architecture is moving even before it is in place, Anthony Belchambers said, chief executive of the Futures and Options Association.
He highlighted that while the Communication recognises the key role played by derivatives in fulfilling the post-crisis objective of enhancing risk management capability, the regulatory drivers for change, when looked at cumulatively, could have entirely the opposite effect – a worry that is being expressed with increasing force, not just by dealers and intermediaries, but by market users. While there is much to support in the Communication, much will also turn upon the detail.
FOA also calls for a common EU/US approach on derivates. The underlying question is whether the drive for more closely-regulated and safer OTC markets will impair their core functionality and diversity and, through significant pass-on costs, put risk management beyond the economic reach of many corporate treasuries. “ The end-users are already making their views very clear on this point. The regulators should pay close attention to their concerns,” he concluded.
The Futures and Options Association (FOA) is an industry association for firms and institutions carrying on business in futures, options and other derivatives or which use such products in their business.