 Tony Freeman
Executive Director, Industry Relations
As the financial regulatory reform bill continues to move through the legislative process, Omgeo hosted a Webinar to keep industry participants up-to-date. The topic, “An Evolving Market: OTC Derivatives and the Changing Regulatory Environment” detailed the proposed mandates in the bill that affect OTC derivatives markets. Alongside my fellow panelists, we explored how businesses would be influenced by the most significant industry topic in 2010 — regulation.
Joining me on the panel were Ila Eckhoff, Director of Derivative Initiatives, Oversight and Control at BlackRock; Jeromee Johnson, Head of BATS Options; Paul Zubulake, Senior Analyst at Aite Group; and Jennifer Peve, Director of OTC Product Management at CME Group. Together we looked at how the proposed OTC derivatives regulation would affect the buy-side industry, what changes are coming to the electronic trading market and what role central clearing firms will play in the new environment.
Although the Congressional conference committee is still negotiating details of the final version of the bill, the buy-side is already looking for ways it can prepare before the regulatory hammer falls. No matter the details, buy-side firms will need to focus on building better, more automated, trading, management and reporting systems. Where Excel spreadsheets were once enough, more sophisticated technologies are now needed. In addition, ensuring better straight-through processing (STP) will move to the front-burner for most firms. Collateral management, which has long been a concern for the buy-side, will also grab more of the spotlight, as firms look for more efficient ways to manage risk across the enterprise, asset classes and geographic regions.
Head of BATS Options and fellow panelist Jeromee Johnson believes the derivatives marketplace is set for an influx of new entrants, driven by the adoption of electronic trading, which is one of the proposed mandates in the pending legislation. Electronic trading brings several benefits to the market, including greater price transparency, better efficiency and healthy market competition.
Lastly, the panel spent a lot of time discussing central clearing, and rightly so. Central counterparty (CCP) firms have been working with the buy-side to ensure the transition to central clearing goes smoothly. The buy-side stands to gain many things from CCP clearing, including access to pertinent trading information and reduced counterparty risk but certain operational impediments have yet to be resolved.
Although the industry is already beginning to prepare for the pending OTC derivatives regulatory changes, the final details of the reform remain unknown. Until the White House signs a piece of legislation into law and the regulatory bodies draft the rules, it is anyone’s guess what the OTC derivatives provisions will mandate. For now, the panelists agreed that early adoption of trading, risk management and reporting technology is a sure way to get a head start on achieving future regulatory compliance.
View Webinar Recording
Back to Executive Blogs page
Back to Home page |
 |
|
|
