Traders warn of confusion on clearing of credit derivatives under EC plans
DERIVATIVES traders yesterday gave a broad welcome to the European Commission’s (EC) proposals on measures to improve transparency, but warned against the creation of a central European clearing house.
The EC’s proposals include standardisation of derivatives products and a central data repository for the £363 trillion industry. But European regulators are also considering expanding a central clearing house already proposed for credit-default swaps to include all derivatives.
Critics say creating a second clearing house alongside one already planned for the US would be confusing. Manoj Ladwa, a derivatives trader with ETX Capital, said: “I see no need for more than one clearing house. It would complicate matters as differences of opinion and definition could arise.”
The International Swaps and Derivatives Association has also cautioned against pushing derivatives trading onto exchanges, as has been planned in the US.