This morning I had the pleasure to deliver the keynote address at the Derivatives World Congress organized by American Leaders. 

The financial crisis exposed significant weaknesses in the over-the-counter (OTC) derivatives market. In the immediate aftermath of the crisis, the G20 Leaders agreed to improve the integrity of trading, clearing and reporting of OTC derivative transactions. Individual regulators responded—some more quickly than others—to introduce new rules for dealers and clearinghouses. The problem is these reforms were introduced without much coordination among the regulators.

Derivatives traders are unable to execute with foreign counterparties, and clear through offshore clearinghouses, without being subject to multiple regulatory regimes. Derivatives markets have balkanized along regional lines, resulting in less choice, less liquidity and higher costs for derivatives users.

In my keynote, I provided some perspective on the likely approach that will be taken by the global regulatory community, led by multi-national organizations like the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO), to tackle cross-border regulation of derivatives.

It is important for Canada that multinational regulators make progress achieving some degree of regulatory recognition in global derivative markets. Canadian dealers and banks, and Canadian capital markets, need to be unshackled from regulatory impediments to support effectively the trade and capital flows from our integrated trade relationships in global markets.

You can read my speech ici.