The financial crisis has led to greater regulatory scrutiny of the OTC derivatives market, prompting several players, notably CME Group and InterContinentalExchange, to begin offering CDS clearing services.

In response to the trend, the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements (BIS) and the technical committee of the International Organisation of Securities Commissions (Iosco) set up a working group in July to review the application of their 2004 recommendations for CCPs to clearing arrangements for OTC derivatives.

The CPSS and Iosco believe that the expansion of centralised clearing and settlement is a positive development because, if well designed, CCPs can reduce systemic risk in financial markets. The working group was set up to promote consistent interpretation, understanding and application of regulatory recommendations.

The guidance also covers other relevant infrastructures handling OTC derivatives such as trade repositories. A consultative document on the guidance "will be issued within the next few months", says the BIS in a statement.

Meanwhile, the CPSS and Iosco have also launched a comprehensive review of their existing standards for payment, clearing and settlement systems.

The bodies argue that market infrastructures generally performed well during the recent financial crisis, and did much to prevent a complete melt-down. Nevertheless, "there are lessons to be learned", they assert.

The review will be led by central bank members of the CPSS and securities regulatorry members of the Iosco Technical Committee, while the IMF and World Bank will also contribute.

A draft of all the revised standards should be issued for public consultation by early 2011.