On April 1, 2015, the International Swaps and Derivatives Association published a document entitled “Path Forward for Centralized Execution of Swaps.” The Path Forward is a set of principles which aim to promote consistency between the regulatory rules adopted by different jurisdictions for the mandatory trading of derivatives on an exchange or electronic trading platform. ISDA is concerned that market fragmentation will continue and increase if US, European and other regulators do not reconcile their requirements. ISDA suggests that the US regulations are inconsistent with its principles and that changes need to be made to the US trade execution rules for a harmonized international regime to be achieved. The principles are: (i) the trading liquidity of a derivatives contract should be determined by reference to specific objective criteria; (ii) derivatives contracts that are subject to the trading obligation should be able to trade on a number of different types of centralized venues; and (iii) trading venues should offer flexible execution mechanisms that take into account the trading liquidity and unique characteristics of a particular category of swap.

The Path Forward is available at: http://www2.isda.org/news/isda-outlines-path-forward-for-centralized-executionof-swaps.