The EU’s efforts to tighten regulation of over-the-counter derivatives are entering a crucial stage. Decisions in the next few months will affect the market for years to come. Pauline Ashall and Mark Middleton, partners at Linklaters, highlight the essential issues that remain to be decided.
In the aftermath of the financial crisis, regulators around
the world have been stepping up regulation of the
over-the-counter derivatives market.
The guiding principles were set in September 2009, when
leaders of the G20 nations agreed that: "all standardised OTC
derivative contracts should be traded on exchanges or
electronic trading platforms, where appropriate, and cleared
through central counterparties by end-2012 at the latest. OTC
derivative contracts should be reported to trade repositories.
Non-centrally cleared contracts should be subject to higher
How much progress has been made in implementing these
commitments varies from region to region. But in the European
Union, a body of new legislation is emerging which promises to
alter the derivatives market substantially.
New laws and renewed laws
In mid-September, the EU published a draft European Market
Infrastructure Regulation (Emir), with new rules for OTC
derivatives, central counterparties (CCPs) and trade
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