The Financial Stability Board (FSB) published today its fourth six-monthly progress report on the implementation of over-the-counter (OTC) derivatives market reforms.
The report takes stock of the readiness of market infrastructure across the FSB's member countries to provide clearing services, collect and disseminate trade data and provide organised trading platforms for OTC derivatives. The report also reviews the progress made by standard-setting bodies and national and regional authorities towards meeting the commitments made by G20Leaders at the Pittsburgh 2009 Summit that, by end-2012, all standardised OTC derivative contracts be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties (CCPs); OTC derivative contracts be reported to trade repositories; and non-centrally cleared contracts be subject to higher capital requirements.
The key messages of the report are as follows:
Market infrastructure is in place and can be scaled up. The development of market infrastructure does not appear to be an impediment to further progress in meeting the G20 commitments for OTC derivatives trading, central clearing, and reporting (although regulators should take into account the start-up time for infrastructure to expand their activities and receive regulatory approvals).
The international policy work on the four safeguards for global clearing is substantially completed and implementation is proceeding at a national level. Sufficient progress on the safeguards has therefore been made to enable all jurisdictions without delay to decide, and put in place, their regulatory approach to central clearing.
Regulatory uncertainty remains the most significant impediment to further progress and to comprehensive use of market infrastructure. Jurisdictions should put in place their legislation and regulation promptly and in a form flexible enough to respond to cross-border consistency and other issues that may arise. Regulators need to act by end-2012 to identify conflicts, inconsistencies and gaps in their respective national2frameworks, including in the cross-border applicg in the cross-border application of rules. They need to worktogether quickly to address the identified issues.
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