Following the financial crisis, the leaders of the Group of Twenty (G20) nations agreed to a series of measures to increase the transparency of the over-the-counter (OTC) derivatives market and to reduce systemic risk. These reforms bring sweeping changes for all financial institutions.
They fundamentally alter the structure of the OTC derivatives markets, significantly impacting the business models, profitability, legal entity structures, operations, data and technology of financial institutions’ derivatives businesses.
Global regulatory reform initiatives are underway to implement these measures – e.g., the US Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), the Markets in Financial Instruments Directive/Regulation (MiFID II/ MiFIR) and the European Market Infrastructure Regulation (EMIR).
The uncertain and evolving regulatory timelines are challenging firms to strategically prioritize imminent market developments and rulemaking against the longer-term, global regulatory change process and related jurisdictional challenges.
By proactively responding to the new business environment and effectively structuring their OTC derivatives business, institutions can take advantage of opportunities, protect franchise value, and avoid the potential downside impacts of these changes.
For more information on OTC derivatives and capital markets reform, and the issues and actions that need to be addressed, please read our materials below.