The State of Play on Derivatives Regulation

Traders Magazine Online News, February 20, 2018

Luke Zubrod

Now more than a year since a new Presidential administration took residence on Pennsylvania Avenue, consequential changes to derivatives laws are beginning to be introduced and gather steam. As part of Chatham’s ongoing efforts to have a positive impact on our clients and markets more broadly, we have put together this update to keep you informed regarding the state of play, as well as to share ways we are engaging to help bring about this positive impact.

At the regulatory level, CFTC Chairman Giancarlo has called for Reg Reform 2.0, and has emphasized the need for greater regulatory simplicity, more flexible trading rules, and better cross-border cooperation, among other priorities. The US Treasury Department released a report in October proposing changes to derivatives and other capital markets in response to a Presidential executive order. The Oval Office took a peek into the derivatives market again just last week, when Chairman Giancarlo visited President Trump to update him on concerns about the potential for a more aggressive regulatory posture towards US registrants from Europe. Speaking of which, European regulators have proposed amendments to its derivatives law, and European Parliament is poised to debate these amendments in the near term.

While many of the contemplated changes could provide meaningful relief to some market participants, the limited nature of the changes largely implies an endorsement of the G20’s reform blueprint. That is, the changes do not fundamentally challenge the core of today’s derivatives regulatory architecture – central clearing, reporting, trading, margin, and conduct rules. However, we believe the atmosphere is ripe for targeted changes beneficial to end users and smaller banks, and so we have remained engaged with policy makers to share ongoing pain points and solutions to address them.

Amidst the considerable array of policy initiatives and actions in the derivatives market, we wanted to call attention to several that we believe have the potential to positively impact some or all of our clients.

For more information on related topics, visit the following channels:

• Regulations