The next few months will be crucial for the over the counter equity derivatives market. Participants have a once-a-decade chance to clean up and simplify the market’s operating practices, in a way that could make trading more robust and efficient.

At issue is the documentation of trades, and the opportunity to achieve a degree of standardisation that the market has never enjoyed before.

This is not just an optional upside for the market, however. It is a requirement.

For several years regulators, led by the Federal Reserve Bank of New York, have been pushing the industry to become more standardised and automated.

Leading dealers signed a letter to the Fed, published on June 2, 2009, committing themselves to certain targets. Now they have got to deliver.

The industry has been frantically negotiating terms on an array of products, in an effort to agree Master Confirmation Agreements (MCAs). These are...