In response to the global financial crisis of 2008, policymakers around the world have set about reforming derivatives regulations to make the financial system stronger and more resilient, writes Andrew Bernard, head of Asia at Tradeweb, in Futures and Options World. To this end, the G20 Pittsburgh Summit called for standardised OTC derivatives to be subject to mandatory electronic trading rules, requiring trades to be carried out on recognised exchanges, cleared through central counterparties and reported to trade repositories.
In September, Japan became the latest country to enforce such rules, having learnt from the U.S. experience with Dodd-Frank. Meanwhile, Europe is approaching its own regulatory milestone, with the MiFID II and MiFIR rules expected to come into force in January 2017.
These rules coincide with a change in market behaviour, acting as a catalyst for the adoption of e-trading. But technology’s value extends far beyond its use as a compliance tool, with advanced trading platforms offering significant efficiency gains. Indeed, as investors become comfortable transacting electronically, these efficiencies will help increase liquidity throughout the marketplace.
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