Global regulators studying derivatives trading: source

Wed Oct 13, 2010 1:25pm GMT

By Huw Jones

LONDON (Reuters) - Global regulators are studying how the $615 trillion off-exchange derivatives market can be shifted onto electronic platforms to curb risks, a source familiar with the matter said on Wednesday.

The International Organisation of Securities Commissions (IOSCO) met at Chennai, India, two weeks ago and set up a task force that will publish an initial report in January next year.

Its members include the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, Britain's Financial Services Authority and India, with the European Union's executive Commission as an observer.

"The real aim of the task force is to coordinate securities and futures regulation and develop oversight structures for derivatives markets," the source added.

The move stems from a decision by the Group of 20 leading economies that as many derivatives contracts as possible should be standardised, reported, centrally cleared and, where appropriate, traded on exchanges or similar platforms.

The aim is to improve transparency and cut risk in a sector at the heart of the financial crisis such, particularly the near-collapse of U.S. insurer AIG.

The bulk of the world's derivatives trading takes place in New York and London and the sector is anxious that new rules are aligned to avoid any unfair advantages emerging.

The United States has already approved a reform of Wall Street that will force some trading onto exchanges or other types of electronic platforms.   Continued...

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