US regulators should work to harmonise rules stemming from the Dodd-Frank Act and ensure central counterparties (CCPs) are more resilient, according to the International Swaps and Derivatives Association (ISDA).
In a paper issued on the 5th anniversary of the Act’s passing, ISDA said good progress had been made on a number of issues, but it also recommended a series of target amendments to tackle the challenges of implementing derivatives reform both in the US and globally.
It said regulators should work to harmonise their rule sets as far as possible, with transparent and clearly articulated substituted compliance determinations to maximise cross-border harmonisation.
ISDA also called on regulators to identify and agree on the trade data they need to fulfill their responsibilities. It wants to see consistent reporting requirements on a global basis, using standardised product and transaction identifiers and reporting formats.
The paper also said more work needs to be done to make sure CCPs are resilient as they have become far more systemically important than they were during the financial crisis of 2008.
ISDA recommends greater transparency of margin methodologies and standards for stress testing, as well as increased regulatory input on acceptable recovery tool and conditions for resolution.
Lastly, it called for amendments to US swap execution facility rules to facilitate cross-border harmonisation and encourage greater trading on these venues. ISDA also wants capital rules to be globally consistent to that financial and non-financial institutions in one jurisdiction are not put at a competitive disadvantage.