Financial regulators in Australia, Singapore and Hong Kong have jointly voiced concerns to US regulators over proposals that may steer clearing for many swaps and derivatives to a small number of US-controlled central counterparties.
Regulators in many markets are working to reform market practices around the clearing of derivatives, in line with policy goals worked out since the onset of the financial crisis in 2008.
Proposals from the Commodities Futures Trading Commission in the US may require banks and others to centrally clear their over-the-counter derivatives with US counterparties, or at least counterparties that are guaranteed by US persons.
Five regulators from Australia and Asia have now warned of "the potential over-concentration of risks in such [central counterparties]" and a reduced liquidity in OTC derivatives.
Executives from the Australian Securities and Investments Commission, the Reserve Bank of Australia, the Monetary Authority of Singapore, the Hong Kong Monetary Authority and the Securities and Futures Commission of Hong Kong all signed the
letter, which was sent this week.