The House of Lords is conducting an inquiry into the European Commission’s “communications on ensuring efficient, safe and sound derivatives markets”. The Lords are inviting written evidence by 1 February 2010. The EC communications outline proposals to reform the regulation and supervision of derivatives markets in the European Union. The Committee hope to receive evidence on the economic benefits and risks associated with derivatives markets and the activities of central counterparties including how clearing might be regulated. The Committee will also be looking at trade repositories and who should be responsible for operating them.
On a related topic, ISDA published a report this month on the impact of the legislation proposed in the US for over-the-counter derivatives on the Foreign Exchange Market. ISDA aren’t convinced that this legislation is helpful: they think it would discourage customisation of foreign exchange transactions, increase the cost and difficulty of hedging foreign exchange positions and, as a result, lead to greater credit, settlement and market risk for companies and investors.

