Submitted by: Submitted by erikneven
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Category: Business and Industry
Date Submitted: 12/09/2013 01:09 AM
Clearing the way for OTC Derivatives
Focus on EMIR
1. Lessons from the 2008 crisis 2. Detailed presentation of EMIR obligations 3. Timing of EMIR 4. Conclusion
1
Lessons from the 2008 crisis
Biggest financial crisis since the Great Depression
With numerous failures out of which the most famous default events were Bear Stearns (March 2008), Lehman (September 2008) and AIG difficulties.
OTC Derivatives perceived as a factor of the crisis by regulators and market participants OTC derivatives outstanding
Large opaque markets Lack of transparency Implying major systematic risks
$
notional amount EOY 2012: 632,500 billion dollars
†
Lehman
G7 meeting
The G20 assessment (Pittsburgh, September 2009)
Banks’ excessive risk taking contributed to the crisis Consumers, depositors and investors should be protected
“Major failures of regulation and supervision, plus reckless and irresponsible risk taking by banks and other financial institutions, created dangerous financial fragilities that contributed significantly to the current crisis. A return to the excessive risk taking is not an option.” (G20 Pittsburgh Declaration)
2
Lessons from the 2008 crisis
From Pittsburgh to Washington and Brussels
G20 agreed on 4 major principles All standardized OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest. OTC derivative contracts should be reported to trade repositories. Non-centrally cleared contracts should be subject to higher capital requirements.”
Transposition in national law throughout the globe
Dodd-Frank Act (Title VII)
EMIR MiFID II MiFIR
Locally driven initiatives
BCBS (margin requirements)
Transposition in national law of G20 commitments Transposition in national law of Basel committee’s recommendations
3
Clearing the way for OTC Derivatives
Focus on EMIR
1. Lessons from...