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LONDON, July 20 (Global Risk Regulator) – A round-up of some recent international regulatory news follows:
Review starts as French warn London over OTC derivatives
LONDON – Amid warnings that rivalry between Paris and London could jeopardise Europe’s future competitiveness in the vast off-market, or over-the-counter (OTC), derivatives markets, central bankers and stock market regulators announced today (July 20) a review of their recommendations for central counterparties.
The Committee on Payment and Settlement Systems (CPSS), the forum that central bankers use to monitor developments in payment and settlement schemes, and the International Organization of Securities Commissions (IOSCO) have set up a working group to review their 2004 recommendations for central counterparties (CCPs) for clearing trades in OTC derivatives. The recommendations set out standards for risk management of CCPs. CCPs act as public buyers to every seller (and vice-versa) in derivatives markets and are seen as crucial to more transparent and sounder OTC derivatives markets. Critics blame sparsely regulated OTC derivatives markets for exacerbating the global financial crisis, with trading in credit default swaps (CDS) particularly castigated.
Jean-Pierre Jouyet, chairman of the Autorité des Marchés Financiers, the French regulator, says in an interview published today in the UK Financial Times newspaper, that disagreement between France and Britain over how to regulate OTC derivatives, could hinder a European solution and drive business to the US.
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