The same in Japan, which has the most active OTC derivatives market in Asia and where the country’s first repository was approved in March this year. In Europe, it is expected that the European Securities and Markets Authority will adopt a decision on the registration of trade repositories still this month and that counterparties will start to report all asset classes to the repositories as of January next year. So, on the surface, it appears we have achieved our goal. But have we really? Does, for example, the supervisor responsible for the supervision of a large cross-border financial institution at the consolidated level have direct and immediate access to information on OTC derivatives transactions that encompass all transactions entered into by all entities of this group? Is the information accessible, in other words can it be easily aggregated across trade repositories and jurisdictions? My answer would be a clear no! 2  BIS central bankers’ speeches  In the Single Supervisory Mechanism, the ECB, as I’ve already said, will be responsible for the supervision of such large banking groups, some of which are global systemically important financial institutions (SIFIs) with large derivatives businesses. The access to data relating to foreign (that is non-EU) subsidiaries of financial groups, where an authority – in this case the ECB – has supervisory responsibility at a consolidated level, is key to assessing the overall risk exposure of a given banking group.
In an unprecedented act of international cooperation, the G20 leaders met in 2008 and 2009 in Washington, London and Pittsburgh to coordinate action and address the regulatory gap. As the crisis has shown, deregulation and reliance on self-regulation just do not work. In the area of OTC derivatives, the objective was to have all standardised OTC derivatives contracts traded on exchanges or electronic trading platforms and cleared through central counterparties by the end of 2012. OTC derivatives contracts were to be reported to trade repositories, and non-centrally cleared contracts subject to higher capital requirements. No doubt, a vast amount of technical work has been undertaken during the last four years, and substantial progress has been made in regulatory and supervisory reform in response to the financial crisis. Just to mention some examples: the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) issued, in 2012, new and more demanding international standards for payment, clearing and settlement systems and trade repositories, and have also recently published guidance on authorities’ access to data stored at trade repositories. The clearing and reporting obligation has been implemented in major jurisdictions. The CPSS and the Financial Stability Board (FSB) have issued guidance on the recovery and resolution of financial market infrastructures, including central counterparties. However, it should also be highlighted that little more than half the FSB jurisdictions have legislative frameworks in place that implement the G20 Pittsburgh commitments. Other important reforms are still underway or have only recently been adopted and implementation is outstanding.