International cooperation: a sine qua non for the success of OTC derivatives markets reform

The international dimension of the reform of over-the-counter derivatives markets is absolutely vital for its success: at end-2011, notional outstanding on these markets amounted to approximately EUR 700 trillion. The initiative to reform these markets was launched by the G20’s international commitments agreed to in Pittsburgh in September 2009 and in Cannes in 2011. These commitments outline the objectives of the reform: mandatory centralised clearing, standardisation, reporting to trade repositories, collateral exchanges for non-centrally-cleared contracts. In order to achieve these international objectives, each country must first adopt appropriate “domestic” legislation. While reform is effectively being implemented internationally (notably via the Dodd-Frank Act in the United States and European Market Infrastructure Regulation – EMIR in Europe), it is more than ever crucial that the new rules established at national levels should function smoothly at the global level. To achieve this goal, two conditions must be satisfied: first, there must be adequate harmonisation of the regulatory content and second, there should be effective international mechanisms for coordinating the application of national rules.