International Regulators Seek Feedback on Interaction of Post-Crisis Reforms with Clearing Incentives
On Dec. 14, several international regulatory bodies jointly announced that they will conduct surveys of market participants as part of a broader review of the impact of the G20 reforms on clearing incentives. The surveys will be conducted by a "derivatives assessment team" formed by the Financial Stability Board, the Basel Committee on Banking Supervision, the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions.
"Central clearing rates have increased markedly since 2009, notably in interest rate derivatives and credit derivatives," the regulators said. "However, concerns have been raised by some that the interaction of some post-crisis reforms may have contributed to inadequate incentives to clear centrally or may otherwise affect costs associated with providing clearing services or with accessing central clearing for some market participants."
Those reforms include the leverage ratio and other Basel III capital standards, the margin requirements for non-centrally cleared derivatives, and the CPMIIOSCO Principles for Financial Market Infrastructures, the regulators said. A wide range of market participants have been encouraged to participate, including central counterparties, clearing members and end-users. The survey responses will feed into a report that is expected to be completed in late 2018. The responses also will feed into a separate two-year review being conducted by the Basel Committee on the impact of the Basel III leverage ratio on the provision of clearing services.
