Regulators plan co-ops as answer to OTC fragmentation

CLS Bank-style regulatory council could be applied to trade repositories and CCPs to avert market fragmentation, but French regulators are not convinced


Regulators are looking to CLS Bank – the centralised utility that guarantees settlement risk in interbank foreign exchange trades – as a model on which to base oversight of critical infrastructure in over-the-counter derivatives markets, and a way of avoiding further market fragmentation.

CLS is regulated by a co-op of 22 central banks. By exporting the same model to OTC clearing houses and repositories, regulators – speaking privately – say they hope smaller countries can be persuaded not to

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