Icap, the interdealer broker, has welcomed the European Commission’s proposals to ensure efficient, safe and sound over-the-counter derivatives markets.
Icap, the interdealer broker, has welcomed the European Commission’s proposals to ensure efficient, safe and sound over-the-counter derivatives markets.
Icap says OTC markets can be made more transparent and robust by further extending regulated electronic trade execution in these markets and by improving the quality of post-trade infrastructure, particularly by the introduction of clearing for standardised trades.
It has welcomed the recognition by the Commission that competition between different trading venues in the OTC derivatives markets increases market efficiency.
Icap also supports the Commission’s proposals for standardised OTC derivatives to be executed on organised trading venues. The proposals highlight the important role for multilateral trading facilities to provide efficient electronic trade execution, affirmation and confirmation to customers and full transaction reporting to central data depositaries.
The broker says the benefits of clearing standardised OTC products through independent regulated clearing houses are already well established – reducing both individual counterparty credit risk and overall systemic risk as well as increasing capital efficiency.
The Commission’s paper recognises that there will be continuing demand for bilateral clearing of those OTC derivatives that are not eligible for CCP clearing. Icap supports the development of automated collateral management networks to streamline the process for both banks and their customers, reducing cost and mitigating risk.
