FIA partnered with data analytics firm Greenwich Associates on a study of trends in the derivatives markets. Researchers surveyed market participants on derivative product usage, counterparty relationships, and regulatory developments.

The researchers highlighted that "64% [of clearing firm respondents] cited 'quality of operational processes' as an important measure for their clearing firm relationships" and identified lower barriers to cross-border trading and clearing as a top concern.

The researchers also noted that:

  • respondents expect further improvements in liquidity and product usage over the next year;
  • there has been a consistent structural shift in derivatives markets from bilateral to centrally cleared derivatives across all asset classes;
  • respondents were receptive to the expanding scope of cleared products; and
  • respondents recognized "reduced counterparty risk" and "increased operational efficiency" as the most important incentives motivating the use of central clearing.

Commentary Steven Lofchie

There can be operational efficiency without regulatory clarity and consistency, and deference to home country regulators. That is, imposing different regulations on the same activity, and subjecting the same regulated entity to multiple regulators, is a principal cause of operational inefficiency. While this is most obvious as to cross-border activities, it is also the case in the United States where, for example, a single market intermediary will be subject to the credit regulations of both the SEC and the CFTC, which results in having separate margin calculations, and separate collateral delivery and segregation requirements.  

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