About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

NYSE Euronext and Eurex Indicate Concern Over Derivatives Regulation, CDS CCP Debate Continues

Subscribe to our newsletter

Two of the contenders in the credit default swap (CDS) clearing counterparty (CCP) race, NYSE Euronext and Eurex, have expressed their concern about a draft bill in the US aimed at expanding derivatives regulation. The firms are worried that the regulation, which would require mandatory clearing of most OTC products, would have the unintended consequence of preventing non-US clearing companies from entering the market.

The bill was proposed and drafted by Agriculture Committee Chairman Collin Peterson and would require all CDS CCPs to be regulated by the Commodity Futures Trading Commission (CFTC). It would also require that the CFTC impose detailed reporting requirements on those CCPs. Peterson is keen to make the market more stable amid complaints that speculators in derivatives markets contributed to commodity price jumps and that a lack of oversight amplified the credit crisis.

To express their concern, the chief regulatory officer of NYSE Liffe, Karl Cooper, and a member of the executive board for Eurex and Eurex Clearing, Thomas Book, spoke before the House Agriculture Committee this week. “Eurex Clearing currently does not operate in the US, but would like to consider offering clearing and other services here in the future with respect to OTC contracts, agreements and transactions,” said Book.

Thus far, NYSE Euronext is the only CCP contender that has received the necessary approvals from the Securities and Exchange Commission (SEC) to offer clearing for CDSs in the US. Cooper is concerned that the restrictive legislation will force it to seek approval from the CFTC as well as the SEC. “The OTC derivatives market is a global market, which demands a global response,” he added.

The Security Industry and Financial Markets Association (Sifma) and the International Swaps and Derivatives Association (ISDA) have also sated that the bill would have a negative impact on the CDS market. Robert Pickel, CEO of ISDA, said the draft rule could force firms to terminate privately negotiated contacts and undermine legal certainty of some trades. A Sifma spokesperson called the move “impractical and unnecessary”.

However, the US is not the only jurisdiction in regulatory uproar with regards to the CDS CCP plans, European Commissioner for Internal Market and Services Charlie McCreevy has continued his campaign for a European only CCP this month. He has gone as far as threatening legislation in this area to spur on the industry to action. The European Commission is also considering the regulation of the credit derivatives market in general at the moment with regards to more adequately monitoring risk.

ISDA is strongly against the idea of multiple regional clearing houses and has been championing the establishment of a single CCP for all trades. Eraj Shirvani, the chairman of ISDA and the head of European credit at Credit Suisse, has indicated that the association is keen to establish “global dialogue with all concerned regulators as a matter or priority”.

The US is also continuing the ongoing debate about which body should regulate the derivatives market, the SEC or the CFTC, or whether the two should be merged. Despite calls for a merger, Gary Gensler, US President Barack Obama’s nominee to head the CFTC, is not keen on the idea and hopes to retain control over the regulation of derivatives rather than ceding it to the SEC.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: In data we trust – How to ensure high quality data to power AI

Artificial intelligence is increasingly powering financial institutions’ processes and workflows, encompassing all parts of the enterprise from front-office to the back-office. As organisations seek to gain a competitive edge, they are trialling the technology in variety of ways to streamline and empower multiple use cases. Some are further than others along the path to achieving...

BLOG

Data’s Role in AI Transition and Value Creation: Data Management Summit London Preview

The rapid adoption of artificial intelligence by financial institutions has required a heavy data management uplift as organisations have upgraded their systems to incorporate the new technology. It has also provided greater opportunity to squeeze even more value from data by enabling its efficient deployment across enterprises. Just how companies manage data for AI to...

EVENT

TradingTech Briefing New York

Our TradingTech Briefing in New York is aimed at senior-level decision makers in trading technology, electronic execution, trading architecture and offers a day packed with insight from practitioners and from innovative suppliers happy to share their experiences in dealing with the enterprise challenges facing our marketplace.

GUIDE

AI in Capital Markets: Practical Insight for a Transforming Industry – Free Handbook

AI is no longer on the horizon – it’s embedded in the infrastructure of modern capital markets. But separating real impact from inflated promises requires a grounded, practical understanding. The AI in Capital Markets Handbook 2025 provides exactly that. Designed for data-driven professionals across the trade life-cycle, compliance, infrastructure, and strategy, this handbook goes beyond...