EU agrees derivatives deal
THE TREASURY last night welcomed an EU agreement on regulating derivatives markets that ended almost two years of debate on how to control one of the most opaque areas of finance.
Under the deal, over-the-counter trades will be forced through clearing houses – a process that incurs a charge and is designed to discourage the more opaque end of the market.
Regulators hope the increased scrutiny will provide a clearer picture of counterparty risk across the system, and protect each party against the threat of a major default.
“The era of opacity and shady deals is over,” said Michel Barnier, the EU commissioner in charge of the rules.
The UK had voiced concerns over plans to force clearing houses to be based in the Eurozone, which would have meant the City missing out a share in the $700 trillion market. But the final draft seems to exclude this.
The Treasury said the deal shows Britain can “secure strong results on critical financial services issues”.