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09 December 2013

Reuters: Watchdog warns of chaos in competing derivatives rules


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Failure to thrash out common supervision of the $640 trillion global financial derivatives industry will split markets and raise costs for end users, IOSCO warned. Banks trading derivatives are looking to the US and the EU to harmonise the approach to new rules, making markets more transparent.


David Wright, secretary general of the International Organisation of Securities Commissions (IOSCO), said slow progress in reaching transatlantic agreement on derivatives rules could see Asian countries like China and Indonesia going their own way. "We can honestly say there is a growing frustration, particularly among our Asian Pacific friends about what's happening", Wright said. He reiterated his call for a global enforcer that can resolve disputes between countries over market rules.

IOSCO, although grouping all top regulators such as the US Securities and Exchange Commission, Japan's Financial Services Agency and Germany's BaFin, does not have the power to impose the market guidance it draws up or resolve disputes. Few believe the United States would accept binding requirements from a global securities body. Wright, however, said it would be in the United States' own commercial interests as markets worldwide move to the US model of market-based financing while banks focus on building up their capital buffers.

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© Reuters


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