Deutsche Brse and Eurex have published their White Paper entitled The Global Derivatives Market A Blueprint for Market Safety and Integrity focusing on the use of exchanges for derivatives trading.
The current political and regulatory debate in both the U.S. and Europe is an intensive discussion on how to safeguard financial market. The aim of the paper is to contribute to this debate by laying out a market structure blueprint that effectively reduces systemic risk.
Key proposals from the paper focus on strengthening current market structure, effective risk management and improved transparency. These proposals include; maximized use of organized markets for derivatives trading, the use of central counterparties (CCPs) where this is not feasible, and bilateral collateralization of derivatives exposure when neither organized markets or CCPs are possible. It also advocates a mandatory registration of open risk positions, establishing reporting standards for all derivative contracts.
Andreas Preuss, Deputy CEO of Deutsche Brse and CEO of Eurex, said: One major conclusion of the new White Paper is that merely introducing stricter regulatory and supervisory requirements may not suffice and that a strengthened market structure with built-in principles to minimize systemic risk appears to be necessary.
The white paper can be found at here.