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

Currency derivatives: waiting for the next wave of regulation

That lawmakers and financial firms are at loggerheads over the forthcoming financial regulations is well known. What may be surprising is that upcoming regulations on OTC derivatives will also cover currency derivatives.

In my earlier contribution to this column I highlighted the resilience of the FX market shown during the crisis, went through the regulatory initiatives mulled at the time and summarized the main risks / challenges being faced in Forex. As far as FX is concerned, my conclusions were that regulators should encourage more use of CLS Bank to reduce Settlement Risk rather than forced clearing  and warned that fresh regulations may hinder the resilience of the marketplace and its own development.  Financial market participants, including ACI International have lobbied the European Commission to leave out the USD 49.2 trillion FX derivatives market from new regulation on the basis that they were not a contributing factor to the crisis. The exact details on how the new rules will affect this market remain unknown until the new rules are announced.OTC Market Regulators concerns on derivatives are fully justified. We all remember that in September 2008, American International Group Inc, a major participant...continued

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