The reform effort seeks to address each of these areas in a comprehensive manner that recognizes the interplay among them. For instance, enhanced capital and liquidity regulations will strengthen the ability of financial institutions to withstand both credit losses and liquidity shocks. Stronger financial institutions, along with enhanced risk management and supervision, will strengthen market infrastructures.
And new rules to improve the functioning of markets, such as those that require greater transparency of over-the-counter (OTC) derivatives markets through trade repositories and swap execution facilities, will strengthen financial institutions and infrastructures alike. Moreover, greater post-trade transparency will improve competition and make it easier for market participants to make informed choices about which OTC derivatives are best suited to their needs.