Following the collapse of Lehman Brothers, the G-20 decided it was not enough to regulate the banks; better oversight of the markets they dealt in was also needed. In order to detect a build-up of large customer positions and enable multilateral netting, regulation will extend to clearing over-the-counter (OTC) products, and the trade repositories that are being set up to report trades both cleared and bilaterally settled.
In the words of Paul Tucker, deputy governor, financial stability, at the Bank of England, central counterparties (CCPs) will become “de facto regulators and supervisors” that also “act as a central market authority for valuing positions and setting minimum margin levels”.
