Can Canada effectively regulate Derivatives Central Counterparties


The recent financial crisis has brought post-trade infrastructure especially Derivatives Central Counterparties (CCPs) to the forefront of the current financial regulatory reform. To implement the current clearing mandate of the G-20, global policymakers are assessing and reassessing the role of CCPs in their financial system and the impact of their operations on financial stability.

This is the abstract of the paper I am currently working on regarding the subject of CCP regulation in Canada. It will examine if the proposed Canadian approach to let CCPs be regulated by the provincial securities commissions effectively address the specific risks that CCPs are intended to address. It will also examine if the regulation of CCPs in canada should be left to the Bank of canada as it has a panoramic view of the Canadian financial system.

To better analyze the the tenets of effective financial regulation, I will also compare the systemic approaches that are being undertaken in the US under the Dodd-Frank Act, by the European Union and in the United Kingdom to regulate CCPs against the Canadian approach. I would also lay this comparison against the recently published Principles for Financial Markets Infrastructures by the Bank of International Settlement CPSS and IOSCO.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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