Reforms sweeping across the European and US derivatives industry will result in the formation of new platforms for trading over-the-counter derivatives on electronic platforms.
It was, perhaps, not supposed to be like this. When on that
fateful September day in Pittsburgh in 2009, the leaders of the
G20 nations announced that "all standardised OTC derivative
contracts should be traded on exchanges or electronic trading
platforms, where appropriate", little did they realise the
Pandora’s Box that they were opening.
Two years on and the industry is in the process of a
revolution. The G20 mandate has led to the birth of new and
adapted concepts of trading platforms as regulators grapple
with the micromanagement of the G20 mandate, the full
implications of which were clearly not thought through. But,
like it or not, a new world is approaching. In the slightly
paraphrased words of the 16th Century reformation theologian
Martin Luther: "here we stand, we can no other".
So where do we stand? Well, that depends where you are
looking down from. Across the G20, countries are looking at
ways of introducing electronic platforms for the trading of
swaps and other OTC derivatives. The reforms are furthest along
in the US and Europe. On both sides of the Atlantic regulators
have been squirreling away to come up with a workable concept
that would meet the G20 mandate. Last month, the EU published
the blueprint for its model joining proposals from the US on
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