Standardisation and exchange trading of OTC derivatives - ACT response to CESR

The Committee of European Securities Regulators (CESR) has been consulting on the benefits of "Standardisation and exchange trading of OTC derivatives".

They are eager to explore with industry what measures could be taken to foster standardisation while still leaving room to customise contracts. CESR is of the opinion that exchange trading of derivatives could deliver a number of benefits like providing a higher level of transparency, enhancing liquidity, ensuring efficiency and risk reduction and providing an easy access for market participants. CESR is considering incentives to promote exchange trading.

In its response to CESR the ACT has taken the position that standardisation will evolve naturally if it is beneficial and cost effective, so that no regulatory action is needed. However in the event of any action by the authorities they should ensure that the ability for companies to undertake transactions tailored to their needs is preserved.