The European Commission yesterday published its consultation paper for derivatives and market infrastructures. The deadline for submitting responses is July 10 2010.
The paper has been published as the commission is finalising draft legislation. To do so, it needs to finalise its views on four main issues: clearing and risk mitigation of OTC derivatives; requirements for central counterparties; interoperability; and reporting obligations and requirements for trade repositories.
The paper reiterated the acknowledgement that “not all cleared contracts are appropriate to be considered eligible for a clearing obligation to apply” and has suggested a combination of two approaches to solving the problem of deciding which contracts must be cleared. One is the “bottom-up” approach, by which a CCP can decide to clear certain contracts and submit proposal to do so to an authority. The authority would inform the European Securities and Markets Authority, the new European regulator, once the CCP had...