Sixth Industry Meeting Hosted by the Federal Reserve Bank of New York
The Federal Reserve Bank of New York hosted a meeting today of major market participants and their domestic and international supervisors to discuss efforts to improve the infrastructure supporting the over-the-counter (OTC) derivatives market. Today’s meeting is the sixth such meeting with industry participants at the New York Fed.
“The industry must undertake a major transformation to bring significantly greater levels of transparency to these markets. Increasing the amount and quality of market information available to participants, regulators and the public is critical to the work of shoring up the stability and efficiency of the financial system,” said William C. Dudley, president of the Federal Reserve Bank of New York.
Market participants provided an update on developments in the OTC derivatives market and agreed to further improvements to support the overall goals of reducing risk and increasing transparency, including:
- Expand central clearing for interest rate and credit derivatives: Market participants agreed to increase central clearing of transactions that are currently eligible to be cleared as well as to extend the range of products that are eligible for central clearing.
- Expand regulatory reporting on OTC derivatives transactions: Market participants will provide regulators with enhanced analysis and reporting to help identify and target opportunities for improvements to increase clearing and standardization.
- Improve risk management for non-cleared derivatives transactions: Market participants reaffirmed their efforts to formalize best practices for managing the risks of non-cleared OTC derivatives, including collateralization practices.
Market participants agreed to detail their next steps and commitments for addressing these priorities in a letter to regulators by March 1.
The New York Fed will continue to work with domestic and international regulators to encourage further improvements and transparency in the OTC derivatives infrastructure and market.