Pushed by Regulators, Industry Sets Ambitious Goals to Modernize OTC Derivatives Infrastructure

Major dealers and industry associations have agreed with international regulators to actively pursue ambitious infrastructure improvements in the over-the-counter derivatives market. The goal of the improvements is to reduce systemic risk and enhance transparency in the $450 trillion (notional) market for instruments that Warren Buffett has famously called “financial weapons of mass destruction.” At the core of the infrastructure improvement proposal is a dramatic expansion of the use of electronic platforms. The goal is to achieve automated matching on trade date, known in the industry as T+0, thereby “creating an environment that will mirror performance in mature markets and eliminate material confirmations backlogs.”

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