The Futures and Options Association has voiced its concern at the European Commission’s draft legislation to reform the over the counter derivatives industry. The trade body has called for clearing houses to have the final say on what business they accept for clearing.
Today’s draft law would toughen clearing and reporting requirements for OTC derivatives under the supervision of European regulators. It would mandate central clearing for standardised derivatives, which would be designated by regulators.
As expected, the proposals contain clearing exemptions for non-financial users of derivatives, which was granted after intense lobbying from corporate hedgers. Industrial firms holding derivatives positions above a certain threshold, called an information threshold, would have to have their trades centrally cleared and report transactions to a trade repository.
The threshold has yet to be defined. Standards will be drawn up by...