Manfred Wiebogen President ACI  The Financial  Markets Association
Manfred Wiebogen President ACI The Financial Markets Association

Derivatives, riding the next wave of regulation

Markets remain more interesting than ever. With so many evolving issues and more often than not all happening simultaneously, it is hard to keep count and to follow each developments. Yet the landscape, in which we operate and from which we make a living is changing fast. And as Darwin’s saying goes, those most adaptable to change will survive (and thrive).

A major change has taken place in the OTC derivatives market. The Dodd-Frank Bill came into law in July while the European Commission, in a rare synchronization, adopted similar regulations on derivatives in mid September.  The financial industry, including ACI international lobbied heavily not to have the USD 53 trillion, FX derivatives market subject to the new regulations because foreign exchange is less complex than other derivatives and did not contribute to the financial crisis. Nonetheless, legislators have been of the opinion that they see no reason why there should be an exemption for the FX market.  In the US, the Dodd Frank Act says that OTC FX derivatives will be regulated in the same way as swaps, unless the Treasury secretary, Timothy F. Geithner makes a written determination that they should not.  Similarly in Europe, the task of identifying which types of contracts to be subject to a clearing obligation lies with the newly established European Securities Markets...continued

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