In their final communiqué from the Los Cabos Summit, the G-20 leaders reaffirmed their commitment to
internationally consistent derivatives regulations so that all standardized OTC
derivative contracts are traded on exchanges or electronic trading platforms,
where appropriate, and cleared through central counterparties by the end of
2012. OTC derivative contracts should be reported to trade repositories, said
the declaration, and non-centrally cleared contracts should be subject to
higher capital requirements.
The communiqué referenced the four safeguards to central clearing of derivatives
enunciated by the Financial Stability Board: 1) fair and open access to central
counterparties; 2) consistent cross-border regulation and oversight of central
counterparties; 3) resolution regimes ensuring that core functions of central
counterparties are maintained during a crisis; and 4) liquidity arrangements
for central counterparties. Now that substantial progress has been achieved in
the four safeguards for a resilient and efficient global framework for central
clearing, noted the G-20, jurisdictions should rapidly finalize their
decision-making and put in place the needed legislation and regulations to meet
the commitment for central clearing.
The G-20 acknowledged the
progress made to develop the key principles to promote internationally
consistent minimum standards for the margining of non-centrally cleared
derivatives and encourage international standard setters to finalize the
proposed global margin standards by the end of this year, to match the
implementation deadline for other OTC derivatives reforms and for the Basel
The G-20 also reiterated
its commitment to make national resolution regimes consistent with the FSB’s
Key Attributes of Effective Resolution Regimes so that no bank or other
financial institution is too big to fail. To this end, G-20 supports the
ongoing elaboration of recovery and resolution plans and institution-specific
cross-border cooperation agreements for all globally systemically important
financial institutions. The G-20 reiterated its commitment to strengthen the
intensity and effectiveness of the supervision of SIFIs and asked the FSB to
report on further progress in this area to the November 2012 G-20 Finance
Ministers and Central Bank Governors’ meeting.
On other
issues, the G-20 called for accelerated progress by national
authorities and standard setting bodies in ending the mechanistic reliance on
credit ratings and encouraged steps that would enhance transparency of and
competition among credit rating agencies. The G-20 also supports continuing
work to achieve convergence to a single set of high-quality accounting
standards. Finally, the communiqué welcomed IOSCO’s report on the functioning
of the credit default swap markets and asked IOSCO to report on next steps by
the November 2012 Finance Ministers and Central Bank Governors’ meeting.