March 29, 2012 - European lawmakers have approved tough new rules governing trading in the over-the-counter derivatives market.
The regulation - approved by an overwhelming majority in Parliament - lays down that OTC derivative contracts would have to be cleared through central counterparties (CCPs), and that all derivatives contracts would have to be reported to trade repositories.
The proposal covers all segments of the OTC derivatives market, including interest rate, credit, equity, foreign exchange and commodities.
The work of the new breed of trade repositories would be monitored by the European Securities and Markets Authority (Esma), which would be responsible for granting or withdrawing their registration and for mediating in disputes among national authorities over the authorisation of CCPs.
MEPs secured a "light touch" regime for pension schemes with regard to the clearing obligation. For these schemes, the obligation would not apply for three years, extendable by another two years plus one, subject to proper justification.
The new rules are expected to come into force by early next year, following the development of technical standards by European supervisory authorities. They will be subject to review and possible amendment within three years.
Welcoming the vote, EU Commissioner Miachael Barnier called on the US and other jurisdictions around the globe to hasten their efforts to bring the derivatives markets to heal and ensure alignment of regulatory provisions worldwide.