News
2009-07-06 - WHOLESALE MARKET BROKERS’ ASSOCIATION WELCOMES EUROPEAN COMMISSION COMMUNICATION ON DERIVATIVES
Commenting on the European Commission Communication on Derivatives*, Alex McDonald, CEO, WMBA said, “The Commission recommends a timely and coherent approach to increasing transparency in the OTC markets, echoing the proposal by the US Department of the Treasury** that moving to central counterparty clearing for both OTC and exchange traded derivatives is desirable. These objectives are indeed fully supported by, and achievable within, the operations of the OTC marketplace and we look forward to participating in the Commission’s consultation process to these ends.
“The WMBA welcomes the increased level of co-ordination between US and European regulatory and supervisory bodies. This is crucial, because of the global nature of the OTC marketplace and the essential role it plays in the generation of wholesale financial markets products, which are used widely in developed and emerging economies. Regulators, especially in Asia, will also be keenly aware of the effect of changes made in North America and Europe and their support for any global measures will be important.
“Further, the paper suggests that standardised OTC derivative products that should be moved either onto regulated and public electronic trade execution platforms or exchanges, thus fostering healthy competition between venues. Inter-dealer brokers already operate multi-user, non-discretionary regulated electronic trade execution platforms (MTFs) for many of the OTC products within a MiFID-compliant environment. These platforms will provide an opportunity to form the basis of the quest for transparency, in particular the provision of aggregated trade data to regulators for supervision purposes, which the policymakers rightly require.
WMBA Chairman, David Clark added, “It is likely that in order to implement the proposals outlined in the paper, changes to the capital adequacy regime will need to be agreed. In principle, this should be achieved through changes in the Basel II arrangements; otherwise, regional attempts to change Capital Adequacy Requirements would lead to regulatory arbitrage and an uneven playing field.”
- Ends -
*Communication from the Commission: Ensuring efficient, safe and sound derivatives markets, 03 July 2009
** Letter from Secretary of the Treasury, Timothy F. Geithner, Department of the Treasury to the United States Senate Members, 14 May 2009
*Inter-dealer brokers are independent agents that facilitate access to OTC and exchange traded pools of liquidity across a full range of asset classes and their associated derivatives. After 25 years of growth, it is estimated that on average about two million OTC trades corresponding to about $5 trillion in size occur daily across the range of FX, interest rate, credit, equity and commodity asset classes in both cash and derivative forms.
Note to Editors:
The Wholesale Market Brokers Association (WMBA) is an independent industry body representing the world’s largest Inter-Dealer Brokers (IDBs) operating in wholesale financial markets including interest rates, credit, and foreign exchange and equity derivatives.
The WMBA has its origins in the FEMBA association established over 50 years ago. Its members cover markets in excess of 30 countries around the world and facilitate the overwhelming majority of transaction volumes in the over the counter (OTC) markets. For further information on WMBA and its members, please visit www.wmba.org.ukrnrn
|
