European securities regulators are calling on policymakers to step up reforms of the over-the-counter derivatives markets amid escalated volatility in European debt markets.

The Committee of European Securities Regulators said Tuesday that they have intensified co-ordination of their market surveillance efforts in the light of recent market volatility in Euro-denominated debt instruments. And they have also ramped up their discussions on whether any further action should be taken, especially given the decision by the German regulator (BaFin) to introduce a short selling ban on May 19.

“At present, CESR members are closely monitoring the situation along with national Finance ministers and central banks. If necessary, co-ordination of any further action will take place within CESR,” the group says.

Also, the CESR says that it believes that structural reforms should be rapidly introduced to enhance the transparency, organisation and functioning of the bond and credit default swap markets that are currently largely traded OTC.

It has launched a consultation on enhancing trading transparency on a broad range of non-equity instruments, including corporate bonds and OTC derivatives, and the CESR is also in the process of carrying out work on possible measures to enhance the organization and integrity of OTC derivatives markets.

“These initiatives would enable regulators to better monitor developments and trace potential cases of market abuse and would enhance the overall efficiency of these markets,” it says.

The CESR “urges the European Commission to urgently adopt the planned legislative reforms ahead of its original timetable.”

Additionally, the CESR says it will evaluating enhanced transparency for government bonds markets and related CDSs in the light of recent developments, and examining the operation of these markets, including settlement.

IE