ISDA Chief Executive Officer Scott O'Malia offers informal comments on important OTC derivatives issues in derivatiViews, reflecting ISDA's long-held commitment to making the market safer and more efficient.
Yesterday, ISDA held its Annual New York Regional Conference, which we previewed for you in Monday’s derivatiViews. Commissioner Scott O’Malia of the US Commodity Futures Trading Commission provided the keynote address to the 250 members in attendance. ISDA Chairman Stephen O’Connor discussed the important challenges facing the OTC derivatives markets and ISDA’s approach to addressing them. It was, by all accounts, another successful ISDA event.
A consistent theme throughout the day was the need to assess whether the current pace and direction of regulatory reform in the US is taking the derivatives markets closer to the overriding goal of systemic risk reduction. ISDA supports this important goal, as espoused by the G20, and the industry’s progress in clearing, compression and trade repositories underscores its commitment to making OTC derivatives markets safer and more efficient.
Connie Voldstad’s remarks, which opened the event, sounded this theme. He noted that as the regulatory reform process unfolds and rules are implemented, we will know much more about what the reform initiatives will actually entail and what they will cost. As the industry puts these initiatives in place, this knowledge may result in the emergence of alternatives that more effectively reduce systemic risk.
He urged the industry and policymakers to be flexible in finding, assessing and adopting the best solutions and to avoid locking into one path that may ultimately prove less constructive than others. A case in point: given the costs and benefits of clearing vs. collateralization of non-dealer OTC derivatives transactions, it might be possible to mitigate their risk much more simply and effectively through collateralization provided it is completely standardized and overseen by an independent third party. This party could then affirm that all exposures are properly collateralized and provide counterparty exposure information to regulators. Concrete proposals on ideas such as this might come in 2012 or several years in the future.
Unfortunately, one press report coming out of the conference misconstrued Connie’s remarks to create a misleading and distortive headline that was completely out of context. The text of the speech is here so readers can access it directly.
One additional note about the conference: we were very pleased to have Professor Craig Pirrong join us to moderate a panel on clearing. Professor Pirrong, who is one of the foremost authorities on the subject, will also participate in our London conference next week. He’s chairing a panel on “Clearing: Challenges to Achieving Its Risk Reduction Potential.” Bob Pickel will address the conference in the morning and Connie will moderate a panel on “Front Office Visions of the Derivatives Future.” Other sessions will cover current regulatory, trading infrastructure and legal issues and developments.
We hope to see you there.
Comments on this and all derivatiViews posts are welcome. Those who wish not to be identified can post their name as “Anonymous” when submitting their thoughts. Email addresses are not published with any comment.
Latest
ISDA ALF: Katherine Tew Darras Opening Remarks
ISDA Annual Legal Forum London, February 11, 2026 Opening Remarks Katherine Tew Darras ISDA General Counsel Good morning and welcome to ISDA’s Annual Legal Forum. Thank you for joining us today and thanks to our platinum sponsors – Cleary...
Maintaining Focus on Basel III Endgame Recalibration
In its original form, the US Basel III endgame proposal would have resulted in disproportionate increases in capital for trading book activities, forcing banks to make difficult choices about their participation in certain businesses. After two-and-a-half years, a revised proposal...
IRRBB Management in EMDEs
Interest rate risk in the banking book (IRRBB) has become a growing priority for banks and regulators in emerging market and developing economies (EMDEs). As many of these countries face monetary tightening cycles and ongoing macroeconomic volatility, bank balance sheets...
Response to CPMI-IOSCO on Consultation
On February 5, ISDA and FIA responded to the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO) consultation on the management of general business risks and general business losses by financial market infrastructures (FMIs)....
