Later this year, Robert Pickel, CEO of the International Swaps and Derivatives Association (ISDA), will step down after 17 years with the organization. During his tenure, the industry has seen some tectonic shifts in the way swaps and derivatives markets trade – none bigger than the global effort to mandate clearing for swaps trades that began in 2009.
In June 2013, the second round of mandatory central clearing regulations went into effect in the United States, following action in March that brought new rules to dealers and active traders. What followed had a broader reach across financial markets; a wider range of hedge funds and asset managers had a new set of rules to play by. The remainder of the proposed rules will move into effect in September.
Last August, ISDA put forth new key principles designed to help achieve a more harmonized framework of international derivatives regulations, which built on previous agreements made by regulators and the financial industry.
Like others in the industry, ISDA highlighted that without proper consistency, the global derivatives market stood at risk of becoming more fragmented then ever, and in turn would potentially undermine the G-20’s objective.
The clearing of standardized derivatives contracts and the proper reporting of swaps trades to trade repositories were just a few objectives laid out at the 2009 G-20 conference. In its Methodology for Regulatory Comparisons, ISDA pointed to these objectives as a stepping-stone and noted the overall importance of following through on the proposed objectives.
So how far have the global derivatives markets come, and will systemic risk continue to lurk in the background?
We spoke with Pickel about the fast-paced changes global derivatives markets are experiencing, progress on reducing systemic risk and what can be done to continue to ensure safe and efficient derivatives markets.