Let me address them in turn. The accounting treatment in many jurisdictions allowed such instruments to be reported offbalance sheet. Furthermore, different valuation methods were used to estimate the risks attached to these transactions. Hence, information was either completely unavailable or incomplete and, even if available, it could not be compared across the sector and jurisdictions owing to different accounting assumptions and valuation methods. It was thus of little value to regulators and supervisors. In addition, financial innovation and strategies that were intended to limit risk – especially securitisation and insurance through derivative products – dramatically increased the complexity of the financial system. Unlike organised markets, such as stock exchanges, which were tightly regulated to protect against market abuse, insider trading, and other transgressions, and were required to disclose information on prices and orders, over-the-counter markets were not. At the height of the crisis, neither market players nor public authorities could monitor the market for corporate credit-default swaps. Hence market participants were unable to evaluate the counterparty risk appropriately. Risk mitigation failed, which ultimately resulted in a drying-up of the whole market. Since that time, many jurisdictions have implemented regulatory frameworks ensuring that counterparties report OTC derivatives trades to trade repositories. In Europe, all derivatives contracts, not only OTC derivatives, are subject to this reporting obligation. In the United States, the reporting and public dissemination of publicly reportable swap transactions in all asset classes is already effective.

In particular, the systemic risk concentration in a small number of global financial institutions is further increased and an increasing number of foreign jurisdictions are exposed to risks arising from the potential default of those banks. This aggravates the risk that these financial institutions may act as contagion channels for financial disturbances and may become or be perceived to be “too big to fail”. In addition, as several countries outside the European Union and the United States have observed, an unfair cross-border distribution of the costs for central clearing could arise. Finally, corporate governance arrangements of central counterparties may not be sufficiently reflective of the interests of all stakeholders, particularly as regards indirect clearing members. I am aware that several measures to control these risks are underway. Rules for central counterparties have been strengthened to ensure that they limit access restrictions to what is really necessary in order to manage the incurred risks and to ensure the central counterparties’ orderly default management processes. Similar governance rules now explicitly require central counterparties to adequately take into account the interests of clients and not only those of their direct members. Similarly, arrangements for the segregation and portability of client positions and collateral are being made. However, we will need to monitor very closely how these new requirements will work in practice, given the strong interest of global dealers in preserving their dominant position in the market.