ISDA has commented on the proposals announced by US Treasury Secretary Timothy Geithner. The reforms Mr Geithner wants would be wide ranging and would in ISDA's view help safeguard smooth functioning of privately negotiated derivatives. The proposals include:
- clearing for all OTC derivatives that are accepted for clearing by one or more clearing houses;
- prudential regulation and supervision for all OTC derivatives dealers and all other firms whose activities in OTC markets create large exposures to counterparties;
- amendments to legislation to give the CFTC power to impose record keeping and reporting on OTC derivatives, and the SEC the same power over securities-related derivatives;
- standardised OTC contracts being moved on to exchanges or transparent electronic trade execution systems, and a system for the timely reporting of trades and prices should be developed;
- powers for the CFTC and SEC to police fraud, manipulation and abuse involving derivatives; and
- a review of eligibility requirements for participation in OTC trades.