The two draft regulations were published recently by the European Commission. Under the proposal for a regulation on derivatives transactions in over-the-counter derivatives will have to be reported to central data centres. This should enable policymakers, regulators and market parties to gain a better insight into the market. The proposal applies to all types of OTC derivatives and to financial enterprises using OTC derivatives as well as non-financial undertakings holding large positions in OTC derivatives.
The proposal for a regulation on short selling and credit default swaps gives the national supervisors power to restrict or prohibit short selling transactions in a certain financial instrument. One of the new European supervisors, the European Securities and Markets Authority (ESMA), which is to become operational from 1 January 2011, will have a coordinating role and will have the authority to issue advice to the national supervisors. For more information see below under "European Parliament approves Financial Supervision Package".
The two proposals for regulations will now be considered by the European Parliament and the Council. The Commission is aiming for the new rules to take effect in the second half of 2012.