Janda, Karel and Rausser, Gordon (2011): American and European Regulation of Over-the-Counter Derivative Securities.
Download (131kB) | Preview
This paper describes the major issues in the clearing of over-the-counter (OTC) derivatives and the current regulative initiatives aimed at removing the market opaqueness. The core of the paper is the comparison of the US Dodd-Frank Wall Street Reform and Consumer Protection Act and the European Market Infrastructure Regulation (EMIR). The similarities and the major differences of these two regulative approaches are emphasized. The major similarities between EMIR and the Dodd-Frank Act relate to the mandatory clearing for standardized contracts, the scope of the derivatives covered, the exemptions from clearing for end-users and the reporting of cleared and uncleared derivative transactions by nearly all financial counterparties. The major differences arise with the restrictions on bank proprietary trading, with separation of derivative trading activities from commercial banking activities, with central counterparties (CCP) ownership rules and with the establishment of mandatory exchange trading requirement.
|Item Type:||MPRA Paper|
|Original Title:||American and European Regulation of Over-the-Counter Derivative Securities|
|English Title:||American and European Regulation of Over-the-Counter Derivative Securities|
|Keywords:||OTC Derivatives; Centralized Clearing; Regulation; EMIR; Dodd-Frank|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
G - Financial Economics > G0 - General > G01 - Financial Crises
|Depositing User:||Karel Janda|
|Date Deposited:||26. Nov 2011 15:35|
|Last Modified:||16. Feb 2013 05:20|
 BIS (2010): Semiannual OTC Derivatives Statistics at End-June 2011. Amounts Outstanding of Over-the-counter (OTC) Derivatives by Risk Category and Instrument. [on-line], Basel, Bank for International Settlements, c2010, [cit. 3rd May, 2011], <http://www.bis.org/statistics/otcder/dt1920a.csv>
 Clifford Chance (2010): Regulation of OTC Derivatives Markets. A Comparison of EU and US Initiatives. [on-line], London, Clifford Chance, c2010, [cit. 3rd May, 2011], <http://www.cliffordchance.com/content/dam/cliffordchance/PDF/Regulation_of_OTC_Derivatives_Markets_-_EU_and_US_comparis on_LORES.pdf >.
 Culp, C. L. (2009): The Treasury Department’s Proposed Regulation of OTC Derivatives Clearing and Settlement. Chicago, University of Chicago Booth School of Business Research Paper no. 09-30, 2009.
 De Meijer, C. R. W. – Wilson, J. (2010): New OTC Derivatives Regulation and the Future of the Derivatives Industry. Journal of Securities Operations and Custody, 2010, vol. 3, no. 3, pp. 241-251.
 Duffie, D. – Zhu, H. (2010): Does a central clearing counterparty reduce counterparty risk? [on-line], Stanford, Stanford University Graduate School of Business, Research Paper 2022, c2010, [cit 3rd May, 2011], <http://www.stanford.edu/~duffie/DuffieZhu.pdf>.
 EC (2010): Impact Assessment for Regulation of the European Parliament and of the Council on OTC Derivatives, Central Counterparties and Trade Repositories. [on-line], Brussels, European Commission, c2010, [cit. 3rd May, 2011], <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2010: 1055:FIN:EN:PDF>.
 Financial Stability Board (2010): Implementing OTC Derivatives Market Reform. [on-line], Basel, Financial Stability Board, c2010, [cit 3rd May, 2011], <http://www.financialstabilityboard.org/publications/r_101025.pdf>.
 Green, P. – Jennings-Mares, J. (2011): Draft EU Regulation on OTC Derivatives. [on-line], San Francisco, Morrison and Foerster, c2011, [cit. 3rd May, 2011], <http://www.cba.uh.edu/spirrong/clearing_organization.pdf>.
 Pirrong, C. (2009): The Economics of Clearing in Derivatives Markets: Netting, Asymmetric Information, and the Sharing of Default Risks through a Central Counterparty. [on-line], Houston, University of Houston, c2009, [cit 3rd May, 2011], <http://www.cba.uh.edu/spirrong/clearing_organization.pdf>.  Rausser, G. – Balson, W. – Stevens, R. (2010): Centralized Clearing for Over-the-counter Derivatives. Journal of Financial Economic Policy, 2010, vol. 2, no. 4, pp. 346–359.
 Rausser, G. – Stevens, R. (2009): Public-private Partnerships: Goods and the Structure of Contracts. Annual Review of Resource Economics, 2009, vol. 1, no. 1, pp. 75–98.
 Sherman & Sterling (2010): Proposed US and EU Derivatives Regulations: How they compare. [on-line], London, Sherman & Sterling, c2010, [cit 3rd May, 2011], <http://www.shearman.com/files/Publication/84c83ccc-2a2d-4e20-880c-45c31c6059ea/Presentation/PublicationAttachment/a13fc03b-2189-413c-9ce1-0b066c5d27f1/FIA-111010-Proposed-US-and-EU-Derivatives-Regulations.pdf>.