Esma elaborates plans for EU single market

Esma elaborates plans for EU single market

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OTC derivatives regulations are a beacon of progress in the creation of a single market in the EU, the Capital Markets Union, according to European Securities and Markets Authority (Emsa).

“The changes in the area of over-the-counter (OTC) derivatives show that we’re well underway with the creation for an EU single market for OTC derivatives,” said Esma’s chair, Steven Maijoor.

However, said that good results achieved in some areas, the EU capital market has limited potential because it is still fragmented.
He pointed to four building blocks to achieving “a strong and integrated capital market to increase capital availability and support economic growth”.

These were encouraging greater diversity in funding, increasing efficiency of markets, strengthening supervision and increasing the attractiveness of capital markets.

Maijoor highlighted the need for EU companies needed to be more reliant on capital markets for their financing and developing a wide variety of channels within the non-banking sector. He also emphasised the need for consistent enforcement across the financial system.

While progress has indeed been made, said Jaz Hanspal, Emea managing director of risk, at technology provider Dion Global Solutions, a single market for OTC derivatives is still some way off:

“To say we are well underway to developing a single market for OTC derivatives is over-egging the pudding somewhat. The journey to a fully efficient OTC market is going to be a long and complicated one.

“Yes, this journey has started, but for Maijoor’s speech to turn from dream into reality, technology will have an important role to play.”
Hanspal said software, such as that developed at his company, will be key to standardising and automating the pricing and valuation of OTC contracts, regardless of the asset class in question.
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