August 2010

Response to CESR's Consultation Paper on Standardisation and Exchange Trading of OTC Derivatives

The London Stock Exchange Group has provided a response to CESR's Consultation on Standardisation and Exchange Trading of OTC Derivatives.  We agree with the objective of strengthening the safety of derivatives markets and assessing how risks can be reduced. However, while trading on organised platforms brings clear benefits, many OTC products are not suitable for this, so regulators should not mandate the trading of products in this way.  A more effective approach to dealing with the risks of OTC derivatives trading is to encourage the use of CCPs for clearing-eligible products.  Other regulatory steps that should be taken include mandating the use of electronic trade confirmation systems, and trade repositories.  Regulators should also consider requiring the removal of barriers which restrict competition and innovation in the trading and clearing of derivatives based on equity indices.

Downloads
LSEG Response on Standardisation and Exchange Trading of OTC Derivatives (file pdf - 4 MB)