Leading Firms Offer Regulators a 'Roadmap' for OTC Derivatives Reform
Posted on Wed, Apr 06, 2011 @ 02:38 PM
On March 31st, 26 leading buy- and sell-side institutions and self regulatory organizations sent a letter to the OTC Derivatives Supervisors Group (ODSG) suggesting a roadmap to help improve coordinated, international regulatory reform of the OTC Derivatives markets. The 31 page document outlines several initiatives and commitments to achieve the objective of enhancing “the core OTC derivatives market function of risk management, while retaining the appropriate levels of flexibility, as needed, for the respective products, processes and means of execution.” These measures are aligned under the four broad goals of the G-20 Leaders' Statement of September 2009 for:
- Increasing Standardization
- Expanding central clearing to a wider range of market participants
- Enhancing bilateral risk management
- Increasing transparency
Additionally, signatories of the letter agreed to form a working group to participate in ongoing regulatory discussions with the ODSG and respond to various issues facing reform of the central clearing process.
The ODSG originated in 2005 when the NY Fed hosted a meeting of regulators of major OTC derivatives markets to address emerging risks of inadequate infrastructure for the rapidly growing credit derivatives market. The group is chaired by the New York Federal Reserve and consists of 14 different agencies that oversee key OTC derivatives markets around the world.
To view the NY Fed's press release in support of the roadmap, click here.
To view the March 31, 2011 letter from major market participants, click here.
For a news archive of all press releases from the New York Fed about OTC derivatives and related issues, click here.
