In his recent article ‘Unexpected outcomes’ (‘Derivatives Clearing 2014,’ Futures Industry Association Europe), Field emphasised the far reaching nature of regulations such as the Dodd-Frank Act, the European Market Infrastructure Regulation (EMIR) and Basel III.
‘We see 2014 as the year for achieving regulatory compliance, but the wisest firms are already thinking about how the tectonic plates are shifting in the industry, and are turning their attention to the more radical change that is coming in 2015 and beyond.’
The article outlines the three main changes introduced by the reforms (the introduction of exchange traded practices, mandatory clearing, trade reporting) and examines the impact of each on the day-to-day operations of firms. One of the key themes of the piece is delayed implementation of European reforms in comparison to their U.S. counterparts. For example, he notes that:
‘In the US, certain categories of interest rate swaps and credit default swaps first became tradable on Swap Execution Facilities (SEFs) in October 2013 … [whilst in Europe] the equivalent Organised Trading Facility (OTF) concept is still a long way from regulatory clarity let alone implementation.’
Field also emphasises the difficulty in foreseeing the exact consequences of the unprecedented slew of regulation that is currently coming into force. Whilst some outcomes are relatively easy to foresee, the far reaching and comprehensive nature of the reforms will likely mean that many unexpected outcomes will come to light in the years to come.