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Speaking on the sidelines of the Asia Financial
Forum in Hong Kong on Monday, Steven Maijoor, chair of the
European Securities and Markets Authority, told Reuters the
European regulator hopes to agree a new timeline for introducing
margin requirements for privately-traded derivatives in the
coming weeks.
An extension to the agreed December 2015 deadline would mark a
reprieve for global banks, which have said there is not enough
time to do the operational and legal work necessary to implement
the post-crisis rules that may add $800 billion to the global
financial industry's cost of doing business.
"We understand as a European regulator that we need to look into
that time schedule. I cannot at this stage say anything
definitive but it's high on our agenda to look at this new
timeline. As a regulator it's important to have clarity on this
deadline, just like market participants want to have clarity on
this deadline," Maijoor said.
Reuters reported in August that the International Swaps and
Derivatives Association (ISDA), which represents the
over-the-counter derivatives market, had written to the Basel
Committee on Banking Supervision (BCBS) and the International
Organization of Securities Commissions (IOSCO), requesting a
delay to rules that aim to make trading OTC derivatives safer.
Maijoor said regulators are discussing the timeline within
IOSCO, adding it was unclear at this stage if they will agree a
new timeline for all or just some margin requirements. "That is
part of the ... discussions and we hope within the first quarter
of this year we'd get clarity on this," he added.
After the global financial crisis, regulators pledged to make
trading OTC derivatives safer by pushing them through clearing
houses, which sit in between a trade to guarantee payment should
a counterparty default.
However, around $127 trillion of the global $600 trillion OTC
derivatives market are too complex to be cleared, ISDA
estimates. New guidelines outlined by BCBS-IOSCO in September
2013 aim to reduce the risk of non-cleared trades by requiring
banks to take margin from a counterparty.
Keith Noyes, regional director, Asia Pacific, at ISDA, said it
would be "supportive of a revised timeline" which would allow
banks to transition to the new rules "in a safe and efficient
way that minimizes market disruption."
(Reporting by Michelle Price, editing by Louise Heavens and
David Evans)
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