On September 17, 2014, the International Organization for Securities Commission (“IOSCO”) launched a consultation on proposed risk mitigation standards for non-centrally cleared OTC derivatives. IOSCO is proposing nine standards aimed at mitigating the risks in uncleared OTC derivatives, in addition to the margin requirements developed by the Basel Committee for Banking Standards and IOSCO in September 2013. IOSCO recognizes that some jurisdictions have already implemented or are implementing requirements in this area. The proposals call for authorities to implement the standards as soon as possible. IOSCO also notes that, due to the global nature of the derivatives markets, any regulatory standards should be compatible across jurisdictions to avoid arbitrage, conflicting rules and to level the playing field. The proposed standards cover scope of coverage, trading relationship documentation, trade confirmation, valuation with counterparties, reconciliation, portfolio compression, dispute resolution, implementation and cross-border transactions. Responses to the consultation are due by October 17, 2014.
The consultation paper is available at: