European Swaps Regulation - Comment Letter - CFA Institute - August 16, 2010

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Standardisation and Exchange Trading of OTC Derivatives
August 16, 2010

From the comment letter:

"In general, CFA Institute is supportive of both greater standardisation in OTC derivative markets and greater use of exchange trading for such contracts. In a survey of CFA Institute members in October 2009, 68 percent of members agreed that all standardised and standardisable derivative contracts that currently trade over-the-counter should be required to trade on a regulated exchange. Likewise, 78 percent of members agreed that such contracts should have to clear centrally. Finally, 66 percent of members agreed that electronic reporting of over-the-counter trades would provide an appropriate level of transparency for all investors for those derivatives that continue to trade OTC.

"Accordingly, CFA Institute is supportive of complementary initiatives to strengthen post-trading infrastructure through central counterparty clearinghouses and trade repositories. We note, however, that such initiatives are not substitutes for on-exchange trading, which addresses the separate issues of trading transparency, liquidity, and price discovery.

"CFA Institute‟s other positions are that price transparency is one of the most important goals of financial markets, and that investors should have full access to relevant market information. Standardisation and exchange trading further these goals."

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