Efforts to beef up oversight of the over-the-counter (OTC) derivatives markets in the wake of the financial crisis remain a work in progress, regulators report.
A group of global regulators known as the OTC Derivatives Regulators Group published a report today that provides a status update on various cross-border implementation issues facing the reform effort. Policymakers initially intended for these reforms to be complete by the end of 2012, but that deadline was missed. And, a variety of cross-border issues are complicating its progress.
The group, which includes the Ontario Securities Commission (OSC) and Québec’s Autorité des marchés financiers (AMF) along with regulators from the U.S., Europe, Asia, and South America, published their initial report Monday, which identifies the current list of remaining cross-border implementation issues, their current status, and a timetable for addressing them.
The list of outstanding issues includes questions about how to treat foreign branches and affiliates of regulated firms; the registration of trading platforms and the move to trade all standardized OTC derivatives contracts on platforms; assessments of regulatory equivalence and substituted compliance; mandatory clearing requirements; risk mitigation techniques for non-centrally cleared derivatives; and, regulatory access to to trade repository data and to firms’ books and records.
In addition to reporting on the status of those issues, the report also notes that the U.S. and Europe have made bilateral progress on timing differences in the regulatory frameworks for organised trading platforms; and there have also been moves to enhance cooperative oversight, including the recently-announced supervisory arrangements between the U.S. Commodity Futures Trading Commission (CFTC), and the OSC, AMF, and the Alberta Securities Commission (ASC), the B.C. Securities Commission (BCSC).
The group says that it will report to the G20 on further progress in resolving cross-border implementation issues, including identification of any cross-border issues that cannot be resolved without legislative change, in time for the meeting of G20 finance ministers and central bank governors next September.
For the next G20 leaders summit in November, the group will report how they are addressing the treatment of branches and affiliates and organized trading platforms, the implementation of the trading commitment, and a timetable for implementing these approaches. It will also provide an update on bilateral efforts to solve these problems, among other things.