General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
November 19, 2018

BCBS, CPMI, FSB, and IOSCO jointly published final report on incentives to centrally clear over-the-counter (OTC) derivatives. Additionally, FSB published reports on the implementation of OTC derivatives reforms and the removal of legal barriers.

Report on Incentives to Centrally Clear OTC Derivatives. In addition to the report, BCBS, CPMI, FSB, and IOSCO published an overview of responses to the August 2018 consultation on incentives to clear OTC derivatives; this overview document sets out the main changes that have been made in the report to address the comments received. The report states that central clearing of standardized OTC derivatives is a pillar of the G20 leaders' commitment to reform OTC derivatives markets in response to the global financial crisis. A number of post-crisis reforms are, directly or indirectly, relevant to incentives to centrally clear. This report by the Derivatives Assessment Team evaluates how these reforms interact and how they could affect incentives. The report, one of the first two evaluations under the FSB framework for the post-implementation evaluation of the effects of G20 financial regulatory reforms, confirms the findings of the consultative document. The analysis suggests that, overall, the reforms are achieving their goals of promoting central clearing, especially for the most systemic market participants. This is consistent with the goal of reducing complexity and improving transparency and standardization in the OTC derivatives markets. Beyond the systemic core of the derivatives network of central counterparties (CCPs), dealers/clearing service providers and larger, more active clients, the incentives are less strong.

Progress Report on Implementation of OTC Derivatives Reforms. The thirteenth progress report on implementation of OTC derivatives reforms notes that good progress continued to be made across the reform agenda of G20 since the 12th progress report and work to assess whether the reforms meet the objectives intended for them continues. The report mentions that 21 out of 24 FSB member jurisdictions have comprehensive trade reporting requirements in force, up by two since the end of June 2017. Eighteen member jurisdictions now have in force comprehensive standards/criteria for determining when standardized OTC derivatives should be centrally cleared while two more jurisdictions adopted mandatory clearing requirements during the reporting period. Sixteen jurisdictions have implemented comprehensive margin requirements for non-centrally cleared derivatives, representing an increase of two jurisdictions. Estimated collateralization rates have risen since the end of 2016. Thirteen jurisdictions have, in force, the comprehensive assessment standards or criteria for determining when products should be platform traded. New determinations entered into force for specific derivatives products to be executed on organized trading platforms in six jurisdictions. Furthermore, the transparency of information about OTC derivatives transactions has increased since the end of 2016.

Report on Removal of Legal Barriers to Trade Reporting. The report details progress by the FSB member jurisdictions in implementing the 2015 recommendations to remove or address legal barriers to full reporting of OTC derivatives data to trade repositories and to access—by authorities (both domestic non-primary authorities and foreign authorities)—of trade data held in trade repositories. Four of these recommendations included implementation dates in 2018, while the other two did not have specific implementation dates. The progress report finds that all but three of the FSB member jurisdictions have removed or addressed barriers to full trade reporting. Five FSB member jurisdictions allow masking of counterparty identifiers for some transactions. As reported by jurisdictions, the percentage of masked trades is relatively low, typically 5% or under, with several under 1%. In twelve jurisdictions, changes have been made, or are underway, to address or remove barriers to access to trade repository data by foreign authorities and/or non-primary domestic authorities, including legal barriers that have only very recently been removed.


Related Links

Keywords: International, Banking, Securities, OTC Derivatives, Central Clearing, Regulatory Reforms, Legal Barriers, BCBS, CPMI, FSB, IOSCO

Related Insights

OFR Adopts Data Collection Rule on Centrally Cleared Repo Transactions

OFR adopted a final rule to establish a data collection covering centrally cleared funding transactions in the U.S. repurchase agreement (repo) market.

February 20, 2019 WebPage Regulatory News

FHFA Finalizes Rule on Federal Home Loan Bank Capital Requirements

FHFA published, in Federal Register, the final rule to adopt, as its own, portions of the regulations of the Federal Housing Finance Board pertaining to the capital requirements for the Federal Home Loan Banks.

February 20, 2019 WebPage Regulatory News

PRA Publishes PS4/19 on Loss-Absorbency Mechanism Under Solvency II

PRA published a policy statement (PS4/19) that provides feedback on responses to the consultation paper (CP27/18) on adjusting for the reduction of loss absorbency where own fund instruments are taxed on write down under Solvency II.

February 20, 2019 WebPage Regulatory News

SRB Publishes Framework for Performing Valuations in Resolution

The framework provides independent valuers and the general public with an indication of the expectations of SRB on the principles and methodologies for valuation reports, as set out in the legal framework.

February 19, 2019 WebPage Regulatory News

BIS Paper on Effect of Securities Lending on OTC Market Liquidity

BIS published a working paper that studies how securities lending affects over-the-counter market (OTC) liquidity.

February 19, 2019 WebPage Regulatory News

US Agencies Extend Consultation Period for the Proposed SA-CCR

US Agencies (FDIC, FED, and OCC) extended the comment period for a proposed rule to update their standards for how firms measure counterparty credit risk posed by derivative contracts.

February 18, 2019 WebPage Regulatory News

FED Extends Consultation Period for Stress Testing Rule

FED has published in the Federal Register a notice proposing amendments to the company run and supervisory stress test rules.

February 15, 2019 WebPage Regulatory News

EBA Single Rulebook Q&A: Third Update for February 2019

EBA published answers to two questions under the Single Rulebook question and answer (Q&A) updates for this week.

February 15, 2019 WebPage Regulatory News

SEC Proposes Rule on Risk Mitigation Techniques for Uncleared SBS

SEC proposed a rule that would require the application of specific risk-mitigation techniques to portfolios of security-based swaps (SBS) that are not submitted for clearing.

February 15, 2019 WebPage Regulatory News

FSB Report Examines Financial Stability Implications of Fintech

FSB published a report that assesses fintech-related market developments and their potential implications for financial stability.

February 14, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2622