FSB Reports Further “Limited” Progress on Reform

The Financial Stability Board (FSB) has published its annual progress report on the implementation of the agreed G20 reforms to over-the-counter (OTC) derivatives markets.

Overall it notes there has been “limited additional implementation of the reforms” since its last report this time last year but does note that 23 out of 24 member jurisdictions have comprehensive requirements in force for trade reporting, an increase of one during the reporting period. Argentina has implemented the reform, leaving South Africa as the only country still to do so. The FSB says jurisdictions report efforts to reduce reporting barriers and masking relief, wider use of the legal entity identifier in trade reporting, and streamlining reporting processes and trade repository operations. Authorities are increasingly aggregating data from multiple trade repositories, the report states.

On central clearing 18 jurisdictions have in force comprehensive standards or criteria for determining when standardised OTC derivatives should be centrally cleared. In a few of these 18 jurisdictions a wider range of products is now subject to mandatory clearing, the FSB says, adding that central counterparties (CCPs) have been active, with some filing for authorisation to clear transactions involving new asset classes in a number of jurisdictions, and other CCPs withdrawing from certain market segments.

Sixteen jurisdictions have in force comprehensive margin requirements for non-centrally cleared derivatives, which represents an increase of one during the reporting period. Estimates of collateralisation rates are available in 10 of these 16 jurisdictions and continue to increase, particularly in credit and equity derivatives.

The FSB also says that interim higher capital requirements for non-centrally cleared derivatives are in force in 23 of the 24 FSB member jurisdictions. It adds, however, that only seven jurisdictions (albeit four more than at end-November 2018) have implemented the final capital requirements, which were due to have been implemented by January 2017.

Comprehensive platform trading requirements are in force in 13 jurisdictions, a number which has remained unchanged during the reporting period and one jurisdiction started exercising deference during the reporting period with regard to foreign jurisdictions’ regimes. Several other jurisdictions extended deference to further jurisdictions.

Colin Lambert

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