United States: The White House: President\u27s Working Group on Financial Markets\u27 (PWG)

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Yale University EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Documents (Series 1) Browse by Media Type 11-14-2008 PWG Announces Initiatives to Strengthen OTC Derivatives Oversight and Infrastructure United States: The White House: President's Working Group on Financial Markets' (PWG) Follow this and additional works at: https://elischolar.library.yale.edu/ypfs-documents Recommended Citation United States: The White House: President's Working Group on Financial Markets' (PWG), "PWG Announces Initiatives to Strengthen OTC Derivatives Oversight and Infrastructure" (2008). YPFS Documents (Series 1). 7300. https://elischolar.library.yale.edu/ypfs-documents/7300 This Document is brought to you for free and open access by the Browse by Media Type at EliScholar – A Digital Platform for Scholarly Publishing at Yale. It has been accepted for inclusion in YPFS Documents (Series 1) by an authorized administrator of EliScholar – A Digital Platform for Scholarly Publishing at Yale. For more information, please contact elischolar@yale.edu. 6/3/2020 PWG Announces Initiatives to Strengthen OTC Derivatives Oversight and Infrastructurehttps://www.treasury.gov/press-center/press-releases/Pages/hp1272.aspx 1/2U.S. DEPARTMENT OF THE TREASURYPress Center PWG Announces Initiatives to Strengthen OTC Derivatives Oversight andInfrastructure11/14/2008To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.HP-1272Washington- The President's Working Group on Financial Markets today announced a series of initiatives to strengthen oversight and theinfrastructure of the over-the-counter derivatives market.Initiatives announced today include the development of credit default swap central counterparties, some of which will commenceoperations before the end of 2008, and the establishment of a Memorandum of Understanding regarding CDS central counterpartiesamong the Federal Reserve Board of Governors, the Securities and Exchange Commission and the Commodity Futures TradingCommission. The PWG also announced a broad set of policy objectives to guide efforts to address the full range of challenges associatedwith OTC derivatives and issued a progress summary to provide an overview of the results of ongoing efforts to strengthen theinfrastructure of OTC derivatives markets.The Treasury Secretary serves as chair of the group, which includes the Chairs of the Federal Reserve Board, the Securities andExchange Commission, and the Commodity Futures Trading Commission. The PWG, working with the Office of the Comptroller of theCurrency and the Federal Reserve Bank of New York, has been actively overseeing improvements underway in OTC derivatives marketsand the reports issued today identify the progress already made and specific objectives for the relevant supervisors going forward.Over-the-counter derivatives are integral to the smooth functioning of today's complex financial markets and, with appropriate regulatoryoversight and prudent management can enhance the ability of market participants to manage risk. The rapid growth of OTC derivativesmarkets over the past several years reflects their increasing importance to market participants.Development of CDS Central CounterpartiesThe PWG's top near-term OTC derivatives priority is to oversee the successful implementation of central counterparty services for creditdefault swaps. A well-regulated and prudently managed CDS central counterparty can provide immediate benefits to the market byreducing the systemic risk associated with counterparty credit exposures. It also can help facilitate greater market transparency and be acatalyst for a more competitive trading environment that includes exchange trading of CDS.At the prompting of the PWG, several potential central counterparty providers have accelerated the development of their efforts. Therelevant regulatory authorities are assessing these central counterparty proposals by conducting detailed on-site reviews of riskmanagement and other key design elements. After completing the on-site reviews, regulators expect to proceed toward regulatoryapprovals and/or exemptions expeditiously and anticipate that one or more CDS central counterparties will commence operations beforethe end of 2008.Memorandum of Understanding among the CFTC, SEC and Federal ReserveTo facilitate the regulatory approval process and to promote more consistent regulatory oversight, the Board of Governors of the FederalReserve System, the Securities and Exchange Commission and the Commodity Futures Trading Commission today signed aMemorandum of Understanding. The Memorandum of Understanding establishes a framework for consultation and information sharing onissues related to CDS central counterparties.The PWG's Policy Objectives for OTC DerivativesThe PWG is announcing a set of additional policy objectives to guide efforts to address challenges associated with OTC derivatives,consistent with the recommendations of the Financial Stability Forum.U.S. and foreign supervisors embarked on an effort in 2005 to improve how market participants manage their OTC derivatives operations,which had not matured sufficiently to support increased trading volumes. These efforts sought to enhance other elements of the marketinfrastructure, reduce systemic risk and address operational risks that have accompanied the growth of OTC derivatives. 6/3/2020 PWG Announces Initiatives to Strengthen OTC Derivatives Oversight and Infrastructurehttps://www.treasury.gov/press-center/press-releases/Pages/hp1272.aspx 2/2 In light of recent developments, the PWG is issuing broader objectives than those that motivated the PWG's previous OTC derivativesrecommendations in the March 13 PWG Policy Statement on Financial Market Developments.The PWG has established the following policy objectives:1) improve the transparency and integrity of the credit default swaps market;2) enhance risk management of OTC derivatives;3) further strengthen the OTC derivatives market infrastructure;4) strengthen cooperation among regulatory authorities.The agencies in the PWG will work with other regulators and market participants to achieve these goals over the next several months.Where necessary, they will support legislative change.-30- REPORTSMOUProgress SummaryPolicy Objectives

PWG Announces Initiatives to Strengthen OTC Derivatives Oversight and Infrastructure

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PWG Announces Initiatives to Strengthen OTC Derivatives Oversight and Infrastructure

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