15 SEP 2010
The multi-trillion dollar derivatives market will be moved on to exchanges and will have to be cleared by a third party, according to a European Commission proposal to be unveiled today (14 September).
The Commission's proposal is part of a global consensus to crack down on a market that regulators believe has exacerbated the financial and economic crisis.
Derivatives are a highly lucrative market of financial products – 605 trillion dollars at the last count - whose value is pegged to an underlying asset which could range from grain to shipping containers.
Subject to the approval of the European Parliament and EU ministers, the Commission wants derivatives to be traded via stock exchanges and processed by clearing houses or central counterparties (CCPs), which will have to comply with stricter governance rules.
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