Global securities regulators Wednesday released a report recommending new international standards for the regulation of firms that trade over-the-counter (OTC) derivatives.

The International Organization of Securities Commissions published the report, which proposes global standards for regulating market participants that are in the business of dealing, making a market, or intermediating, transactions in the OTC derivatives market.

It notes that such firms have historically faced weaker regulation than participants in the traditional securities market. And, that, without sufficient regulation, some firms “operated in a manner that created risks to the global economy that manifested during the financial crisis of 2008.”

The report aims to set out obligations for these sorts of firms to help mitigate systemic risks; manage counterparty risk; and protect participants in the OTC derivatives markets from unfair, improper or fraudulent practices. It includes recommendations regarding: registration and licensing standards; capital requirements; business conduct standards; supervisory standards; and, recordkeeping obligations.

IOSCO notes that consistency among regulators in the supervision of these sorts of firms “is essential to the successful oversight of the global OTC derivatives market”, particularly as many of them operate in multiple jurisdictions. And, it notes that it has tried to harmonize the recommended requirements with those that apply to traditional securities market intermediaries, to avoid creating unnecessary burdens on firms that operate in both realms.

In Canada, the Canadian Securities Administrators have issued a series of papers that aim to address some of these same issues, as regulators try to build a new regulatory framework for the OTC derivatives market. And, papers concerning others, such as registration and capital and collateral requirements, are slated to be published later this year.