International Coordination of the Reforms of OTC Derivative Markets

The International Energy Agency, OPEC and the International Energy Forum organized two days of meetings to discuss the interaction between financial and physical energy markets and the regulation of these markets — see the Financial Times’ coverage here and here.

I was asked to speak on international coordination of regulation. Here are my slides. I took the chance to connect our argument that the costs to end-users depend upon whether increased clearing raises or lowers the aggregate credit risk. Both the physical and the financial markets for oil are global. If reforms are uncoordinated, there is the potential that the clearing system will be fragmented across national boundaries. This fragmentation could frustrate realizing the potential for reducing aggregate credit risk.

3 Trackbacks

  1. […] we have emphasized that end-users have much to gain from the central clearing mandate—see here, here, here and here. Central clearing creates the possibility to reduce the total amount of credit risk […]

  2. […] is played, and how it is played determines the total risk to society. See posts on this point here, here and here for starters (the last one cites Pirrong’s less combative attention to some of the […]

  3. […] the micro issue include this one and this one. Previous posts on the macro issue include this one, this one and this […]

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