The European System of Central Banks (ESCB) and the Committee of European Securities Regulators (CESR) have published draft recommendations.
These suggestions are for central counterparties and are amended for public consultation of OTC (over-the-counter) derivatives.
In view of the financial stability risks posed by the growing scale of over-the-counter derivatives exposures, particularly credit derivatives exposures, the ECOFIN emphasized the need to support appropriate initiatives to reduce those risks. One specific way is by developing one or more European central counterparties to serve the OTC derivatives markets.
Responding to this request, the ESCB and CESR analyzed a wide range of factors relevant to the clearing of OTC derivatives in general and credit derivatives in particular.
The working group has identified a few areas where additional clarifications of the relevant recommendations could be helpful and has revised the recommendations accordingly.
The draft document published this week only focuses on OTC derivatives and has presented only a limited number of amendments.
Since the ECOFIN has requested that the work be finalized as soon as possible, a deadline for contributions from all interested parties (e.g. clearing and settlement service providers, intermediaries, banks, investment services firms, issuers, institutional investors, industry and trade associations), and especially from retail investors and their organizations, has been set for April 17.