27 April 2009
New research: “Current issues affecting the OTC derivatives
Market and its importance to London”
The Over the Counter (OTC) Derivatives market is a global market
and needs global Central Counter Parties (CCPs). Thus the US and
European Commission should not try to create Regional CCPs for Over
the Counter (OTC) derivatives, according to a new report from
Bourse Consult, published by the City of London Corporation
today.
The report examines the scale and scope of the OTC derivatives
industry, its role in the financial crisis and its importance to
London's financial centre. London has 43% of the global OTC
derivatives market by value, whilst the US has 24%.
The report suggests that Collateralised Debt Obligations (CDOs)
on Asset Backed Securities (ABS), sold into highly leveraged
Structured Investment Vehicles (SIVs) and held off banks’ balance
sheets, were the major “guilty parties” in the financial crisis.
The report finds little evidence that Credit Default Swaps (CDS) -
which were traded far more widely than CDOs - contributed
significantly to the crisis.
The report concludes by making recommendations for future
regulation of the OTC derivatives market in the US and European
Union.
Ends
Notes to editors
-
Download "Current Issues Affecting the OTC Derivatives Market and
its Importance to London"
- About the City of London Corporation:
The City of London Corporation provides local government services
for the Square Mile, the financial and commercial heart of Britain.
The Corporation works nationally and internationally to maintain
and enhance the City as a world-leading international financial and
business centre. It also serves London and the UK with special
responsibilities such as the Barbican Arts Centre, the Central
Criminal Court at the Old Bailey, 10,000 acres of open space
including Hampstead Heath and Epping Forest, three wholesale food
markets, three inner-London City Academies, the City Bridge Trust,
economic regeneration programmes in neighbouring boroughs and
acting as London’s Port Health Authority.
- About Bourse Consult::
The author of the Report, Lynton Jones, is chairman of Bourse
Consult, a group of independent consultants, all of whom have held
senior positions in the securities industry in the trading,
clearing, regulation and technology of securities and derivatives.
Further details can be found at
www.bourse-consult.com.
- Press enquiries:
Kristina Blissett
Tel: 020 7332 3451
Mob: 07795 290 040
Email:
kristina.blissett@cityoflondon.gov.uk