On 3 July 2009, the European Commission launched a public consultation on possible initiatives to enhance the resilience of over-the-counter (OTC) derivatives markets. This follows the adoption by the Commission of a Communication and an accompanying staff working paper on ensuring efficient safe and sound derivatives markets. The Communication and accompanying paper emphasise the increased uncertainty and lack of transparency that exist in the OTC derivatives market which has been highlighted by the financial crisis and which may undermine financial stability.

In order to alleviate these risks the Communication provides tools to strengthen derivatives markets. Examples include:

  • Standardisation (for example, the use of standard contracts, central storage and collateral management processes), which the Commission considers is a pre-requisite for the other tools identified.
  • A central data repository to collect data, such as the number of transactions, for all trades.  

The consultation ends on 31 August 2009. The Commission will hold a public hearing on its proposals on 25 September 2009. It intends to present appropriate initiatives, including legislative proposals aimed at increasing transparency in the derivatives market and ensuring financial stability, before the end of 2009.