At EU level, the recent proposal for a directive presented by the Commission would consistently enhance the capacity of the supervisory authorities to gather information on the exposures of hedge funds, also in cooperation with the soon-to-be-established European Systemic Risk Board.
Finally, initiatives are under way to enhance the resilience of credit derivatives markets, in particular by establishing central clearing counterparties subject to effective regulation and supervision. Recent ECB research has demonstrated that derivatives contribute to systemic risk by building up financial imbalances. In particular, derivative positions create hidden leverage and increase risk-taking incentives in the financial sector.