ISDA comments on SDP role in the new regulated world

ISDA have released a response to the FSB progress report published on April 15. While the response covers regulatory arbitrage, execution, clearing and reporting, the most interesting statement is their view of how SDPs can and should function within the new regulations.

In the section “Organised trading of derivatives”, the following comment is made:

As for the additional analysis of the role of multi or single dealer platforms that IOSCO is currently undertaking, ISDA believes that single-dealer platforms can provide enriched content and functionality to the end-user and should be eligible as an execution venue for derivatives, particularly in co-existence with multi to multi platforms. Equally, ISDA does not believe that allowing single dealer platforms as permitted execution venues for derivatives in locations outside the US will create regulatory arbitrage.

Perhaps IOSCO will include SDPs in their ongoing study into the efficiency of each type of execution platform. As Paul & I have stated previously, the OTC derivative market is complex and is comprised of many segments with specific characteristics. The trading platforms currently in use have evolved over time and the variety of those platforms are a measure of that complexity.

The ISDA response is here:

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