Deutsche Börse Welcomes EU COM Proposal for OTC Derivatives Market Reform

Deutsche Börse Group welcomes the intended regulation on OTC derivatives, central counterparties (CCPs), and trade repositories as presented on Wednesday by the European Commission. The regulation demonstrates that the European Union (EU) is making significant progress toward fulfilling G20 commitments aimed at improving the stability and safety of financial markets.

The Group supports major aspects of the proposed regulation that will contribute to these objectives, among them:

- the obligation for OTC derivatives to be cleared via CCPs so that risks are optimally managed,

- the reporting requirements and establishment of trade repositories in the EU in order to provide regulators with the necessary information to oversee the build-up of OTC derivatives positions, and

- the strong prudential requirements for CCPs that should foster harmonization across Europe and ensure that CCPs continue to perform their risk management and risk mitigation roles.

As owner of Europe’s largest CCP, Eurex Clearing, Deutsche Börse looks forward to working closely with market participants, regulators as well as the European Commission to achieve the overall goal of reducing systemic risk in the OTC derivatives markets.

“We regard an ongoing close alignment of the European initiative with the U.S. Dodd-Frank Reform Act as absolutely necessary. It is critical to align regulatory efforts on both sides of the Atlantic to avoid regulatory arbitrage, especially in the area of exchange trading of OTC derivatives, which is covered in the U.S. legislation but will be introduced at a later time in the EU in a different legislative package”, commented Stefan Mai, Head of Market Policy and European Public Affairs, Deutsche Börse and Eurex.