IMF: Mandatory central clearing for OTC derivatives should be phased in gradually
20 August 2010
The IMF warns that moving OTC derivatives contracts to CCPs will bring high transition costs. However, if approved, mandatory central clearing for OTC derivatives should be phased in gradually.
The Following main points were presented in the IMF position paper:
· The reform proposals should be internationally coherent, in order to reduce the risk of disjointed policies, distorted capital flows and regulatory arbitrage.
· Moving OTC derivatives contracts to CCPs will bring high transition costs due to the need to post large amounts of additional collateral at the CCPs.
· If approved, mandatory central clearing for OTC derivatives should be phased in gradually.
· IMF supports some exemptions for end-users that are involved in “real” hedging transactions.
· IMF supports the threshold but calls on the Commission to clarify what exactly will be the threshold.
© International Monetary Fund
