TMX Group issues paper on meeting G-20 OTC objectives
The TMX Group Inc. issued a paper last week providing its perspective on issues deriving from the financial crisis and discussing how the core competencies of a combined regulated exchange and clearing house are designed to meet G-20 objectives respecting improving over-the-counter (OTC) derivatives markets. While the paper focuses primarily on the TMX Group's competencies applicable to OTC and exchange-traded derivatives, it does provide an interesting viewpoint on how Canada should respond to prevent similar crises from recurring.
According to the TMX,
[t]he financial crisis was global, and international organizations are adopting recommendations and commitments to address key global issues. However, legislators, regulators and supervisors are provincial and national, and it will be these authorities, working with market operators and market participants who will be responsible for both the implementation and the success of these measures.
Specifically, the paper recommends to Canadian regulators that they utilize domestic facilities with international linkages to provide regulatory oversight of OTC markets, such as trading, clearing, data warehousing and regulatory services. According to the TMX, such a regulatory scheme would satisfy the G-20 requirements of strengthening prudential oversight, improving risk management, increasing transparency, promoting market integrity, protecting against market abuse, mitigating systemic risk and reinforcing international cooperation.
