Regulation implementing Basel III in Europe entered into force two months ago. Tomorrow the European Parliament will discuss the regulation establishing a Single Supervisory Mechanism, an important step towards a European banking union. Under the Single Supervisory Mechanism, one supervisor will have a complete overview of an entire large and interconnected banking group in the context of the  BIS central bankers’ speeches  1  single currency. Furthermore, work is being undertaken to address cross-border regulatory inconsistencies. So where do we stand five years after Lehman Brothers and four years after Pittsburgh? Did we achieve the overall goal of improving transparency, mitigating systemic risk and protecting against market abuse in OTC derivatives markets? Are we now better placed to monitor risks building up in the financial system? I will limit myself to three of the many issues covered by this conference: lack of transparency, the challenges remaining in central clearing and inconsistencies in crossborder application. Transparency First, I would like to reflect on one of the main root causes of the financial crisis: the lack of transparency relating to OTC derivatives in general. When I say “in general”, I mean that there was not only a lack of transparency on OTC derivatives at the level of the market, but also at the level of individual institutions and counterparties. There are two dimensions to the lack of transparency: lack of information due to a lack of reporting requirements, and data fragmentation making it difficult to connect the dots and see the full picture.

It will therefore be critical to ensure, in the context of the EMIR implementation, that information-sharing within the colleges will effectively address not only the micro-prudential concerns of authorities but also the need for appropriate macroprudential analysis. Second, another important concern regarding the institutional setting is the fact that global cooperative oversight arrangements for central counterparties are still lagging significantly behind what has been agreed in the CPSS-IOSCO Principles for financial market infrastructures. Indeed, the respective gap between the EU level and the global level is striking in this regard. In the European Union, given the introduction of legally binding requirements for central counterparty supervisors to cooperate and consult with all relevant authorities – including central banks, supervisors of major clearing banks and supervisors/overseers of interoperable infrastructures – cooperative oversight arrangements for all EU central counterparties, in the form of EMIR colleges are currently being set up. At a global level, however, virtually no progress in cooperative oversight or even in terms of pure informationsharing has been achieved for several major global central counterparties outside the European Union. This is a key concern especially in the field of OTC derivatives, given the global nature and interconnectedness of these markets. Indeed, if we want to ensure that the introduction of mandatory clearing is implemented in a way that ensures that central counterparties manage systemic risk effectively, it is not enough that they are supervised and overseen in their home jurisdiction.