I want to bring out that they are, nevertheless, integral to financial stability authorities. Under each of those headings, I shall raise a few points that have not featured prominently in recent debates. To be clear, I shall not attempt to cover all important markets. And I shall not address important questions about the role of securities regulators in crisis management, circuit-breakers, or counter-cyclical policies such as varying minimum margin requirements as conditions change. Moreover, I must stress that I speak only for myself. The issuance and distribution of securities Toxic ABS and CDOs – cash as well as “synthetic” or derivative versions – were at the centre of the crisis. They were not toxic for the financial system because they were risky or, indeed, because many underlying household and business borrowers became overindebted. Markets can price (and ration) risk they comprehend (if appropriate requiring yields that inhibit issuance). They were toxic because they were mispriced; and they were mispriced in part because they were misunderstood. Through the consequent enticements to leverage, that misunderstanding engulfed banks, asset managers, credit insurers and, eventually, the authorities. Both dealer-financing markets and end-user markets closed. BIS central bankers’ speeches  3  Listing authorities and securities regulation And yet all of those securities were issued and/or distributed under the securities laws and policies of developed countries or financial centres with elaborate securities market regulation. Prospectuses or other documentation had to meet regulatory or listing requirements.

The cash ABS markets are another, with central banks now taking a lead by introducing standards for transparency and the structure of the securities we are prepared to take as collateral. Trading platforms and exchanges Currently, a key area of reform is the infrastructure for the main over-the-counter derivative markets. In the trading area, there is a debate about how far to unravel the predominantly bilateral mechanics of OTC derivatives markets and how far to move towards exchanges. Perhaps to  14  I should disclose that I chaired the FSB working group that drew up the Principles. But they belong to the FSB, endorsed by its Plenary, rather than to the working group. “Principles for Reducing Reliance on CRA Ratings”, Financial Stability Board, 27 October 2010. Available at http://www.financialstabilityboard.org/publications/r_101027.pdf  6  BIS central bankers’ speeches  different degrees in the US and the EU, there is an unresolved issue about whether all standardized derivative products should be traded via Multi-Dealer Platforms, which are a bit like exchanges, or whether to allow Single-Dealer Platforms through which a broker-dealer sets up its own quasi-exchange. A preliminary study by IOSCO did not reach a clear conclusion given the dispersion of views.15 I want to inject one thought from a financial stability perspective into this debate. So far as we can see, the debate has been cast pretty much entirely in terms of market integrity (honesty and fairness), transparency and the efficiency of price discovery – the core concerns of a securities regulator. The missing word is “liquidity”.