A consultation paper on incentives to centrally clear OTC derivatives has been jointly published by the Financial Stability Board, the International Organization of Securities Commissions, the Basel Committee on Banking Supervision and the Committee on Payments and Market Infrastructures. The paper is part of the FSB's post-implementation evaluation of the effects of the G20 financial regulatory reforms. The consultation paper sets out the results of an evaluation of the reforms that have been implemented to incentivize central clearing of OTC derivatives, including mandatory clearing requirements, capital, liquidity and margin requirements, as well as the reforms to CCP resilience, recovery and resolution. The evaluation found that:

• the changes observed in OTC derivatives markets are consistent with the G20 Leaders' objective of promoting central clearing as part of mitigating systemic risk and making derivatives markets safer.
• the relevant post-crisis reforms, in particular the capital, margin and clearing reforms, taken together, appear to create an overall incentive, at least for dealers and larger and more active clients, to centrally clear OTC derivatives.
• non-regulatory factors, such as market liquidity, counterparty credit risk management and netting efficiencies, are also important and can interact with regulatory factors to affect incentives to centrally clear.
• some categories of clients have less strong incentives to use central clearing, and may have a lower degree of access to central clearing.
• the provision of client clearing services is concentrated in a relatively small number of bank-affiliated clearing firms.
• some aspects of regulatory reform may not incentivize provision of client clearing services.

Feedback to the consultation paper is invited until September 7, 2018. The final report, which will be published in November 2018, is intended to assist jurisdictions in determining whether any policy changes are necessary to their implementation of the G20 reforms for the OTC derivatives markets, taking into account the objectives of the G20 reforms.

View the consultation paper.