Release: #4239-99
For Release: March 3, 1999

CFTC Announces Release of 1999 Staff Survey on Regulation of
Over-the-Counter Derivatives Transactions

The Commodity Futures Trading Commission today released the 1999 Survey on Regulation of Over-the-Counter Derivatives Transactions compiled by its Office of International Affairs. The Survey contains responses received from regulators in 16 jurisdictions in answer to a questionnaire circulated in 1998 regarding individual regulatory approaches to over-the-counter (OTC) derivatives transactions. The responding jurisdictions are Australia, Belgium, Brazil, Canada, France, Germany, Hong Kong, Italy, Japan, The Netherlands, Ontario, Qu�bec, Spain, Sweden, Switzerland, and the United Kingdom.⁽¹⁾

Among other things, the Survey was conducted in order to identify the extent to which existing financial regulation specifically addresses OTC derivatives. The report details:

• what types of OTC derivatives transactions are permitted;
• who are the responsible regulatory authorities;
• what limitations there are on eligible counterparties;
• regulatory requirements related to conduct of business;
• prudential issues, such as internal controls;
• development of over-the-counter clearing facilities; and
• contemplated changes in the evolving regulatory framework for financial regulation generally.

The Survey also includes a bibliography of relevant source material.

To understand how OTC derivatives transactions are regulated, it is necessary to read the Survey responses in conjunction with the general law and regulations underlying financial transactions generally and derivatives in particular. Further information on derivatives regulation generally may be found in a frequently updated report entitled International Regulation of Derivatives, Markets, Products and Financial Intermediaries, available on the International Organization of Securities Commission's (IOSCO) website at www.iosco.org.

In releasing the Survey report, Chairperson Born said:

"This Survey underscores that there is little uniformity in regulatory approach to OTC derivatives. I believe it is very important to make information on the status of regulation of OTC derivatives transactions more accessible and transparent. This Survey is the first broad-based compendium of the law and regulations on this subject. I hope that the Survey will assist users of the markets, and persons interested in the oversight of financial markets generally, in ascertaining the requirements that are in place, with respect to OTC transactions in various major jurisdictions outside the United States. The Survey is a starting point; more detailed work in this area of comparative law and regulatory practice would be worthwhile."

A copy of the report is available on the CFTC's website in Adobe Acrobat-pdf format for download at International Publications. A printed copy of the report and the questionnaire also may be obtained by contacting the Commission's Office of Public Affairs, Three Lafayette Centre, 1155 21^st Street, N.W., Washington, D.C. 20581, (202) 418-5080.

¹ In some jurisdictions where banks and securities firms are separately regulated, the responses were reviewed by both regulators.