The OTC derivatives market has been in regulators' sights since the global financial meltdown that, critics say, the sophisticated financial contracts exacerbated. Today, the industry amplified its conciliatory tone by going public with a number of concessions that it says will “strengthen the robustness of the OTC derivatives market infrastructure, improve transparency and build a more resilient risk management framework.”
The concessions were in a letter the International Swaps and Derivatives Association (ISDA) submitted to global regulators. The four areas that the industry promised improvements in were: central clearing, transparency, standardization and operational efficiency, and bilateral collateral arrangements.
In a further effort to show the industry is leading change, the ISDA detailed a number of “achievements” made since the last update in June 2009. Improvements relate to a formal governance framework, credit derivatives standardization and CDS clearing in Europe.
Whether these promises and improvements are enough to stay significant changes in the industry's regulatory structure, however, remains to be seen.