IOSCO Backs Post-Trade Mandate for Credit Derivatives

A global regulatory association has backed plans to implement world-wide post-trade rules for the credit default swaps (CDS) market.

The International Organization of Securities Commissions (IOSCO) published a consultation report which sought to analyse the impact of mandatory post-trade transparency on credit derivatives.

The report found: “IOSCO preliminary believes that greater post-trade transparency in the CDS market, including making the price and volume of individual transactions publicly available, would be valuable to market participants and other market observers.”

Furthermore it all urged all of its members to take steps to enhance post-trade transparency in the CDS market in their jurisdictions.

Currently only Canada, Europe and the U.S. have applied post-trade rules such as reporting and central clearing for the CDS market.

In the U.S. certain credit derivatives are required to be executed and cleared on electronic venues called swap execution facilities (Sefs). While Europe does not have an execution mandate, central clearing for CDS is expected to come into force in early 2016.

IOSCO is an association of global organizations that regulate the world’s securities and futures market.

The call for transparency comes after a number of Wall Street’s big banks were accused by a New York federal judge of violating antitrust law by fixing prices and restraining competition in the $21 trillion CDS market in September.

The defendants include Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC Holdings, J.P. Morgan, Morgan Stanley, Royal Bank of Scotland and UBS.