the profit motive of for - profit ccps and full compliance with the pfmis. put simply, some ccps will prefer to avoid the full costs of compliance. in other words, there will always be a risk of a race to the bottom, which we must continually push against. in this respect, the effort could also falter if countries were to fail to enact the relevant legislation and policies to put the pfmis in practice. for the global system to be robust, the requirements for ccps will need to be enforced across the different geographic regimes. i am also worried about fragmentation. in particular, i worry about the proliferation of trs and ccps geographically – in some cases in each of the major asset classes. in the case of ccps, fragmentation would bring two costs. first, the netting benefits would be reduced and, second, the system would be more complex. in an ideal world, i would prefer very few, very robust ccps, rather than a proliferation of many, less robust ccps. but whether that is what we will get is unclear to me at this point. finally, i am worried that we are not going to achieve the full benefits from trade repositories. regulators, market participants and trs must continue to work together to ensure that comprehensive, and meaningful data are being reported to trs and that authorities have the ability to access and analyze the data from the trs. although authorities currently receive data, the data are often fragmented and reported in different formats or are not comparable across trs. this poses challenges for regulators and supervisors of market participants and global ccps as well as authorities more broadly. aside from the issues with tr fragmentation, data quality and regulatory access to data, we could be leaving considerable money on the table by not using the tr dataset to increase transparency into the marketplace more broadly. moving forward on all of these issues will require global coordination and continued efforts across all stakeholders. authorities must continue to coordinate their oversight of global infrastructures. where fmis are “ global, ” that is providing services across multiple jurisdictions and in multiple currencies, it is important for the relevant authorities to find efficient ways to cooperate with each other to effectively carry out their respective responsibilities. additionally, where there are overlapping or contradicting regulations, authorities must provide clear guidance to the market on how regulation will be applied. one final point : what matters is not the standardization of otc derivatives, central clearing or the use of the

william c dudley : remarks at panel discussion on otc derivatives reform and broader financial reforms agenda remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the 2013 otc derivatives conference, paris, france, 12 september 2013. * * * it is a pleasure to be here. who wouldn ’ t want to be in paris – anytime – let alone in september? my comments today will focus on how over - the - counter ( otc ) derivatives reform fits in with the broader financial reform agenda and those aspects of the reform effort in otc derivatives that could potentially fall short relative to those broader objectives. my short answer, which i will elaborate on in my remarks, is that the otc derivatives reform effort fits in very well with the broader reform agenda, but there are significant risks that we will fall short in this arena relative to what we are likely to achieve elsewhere. as i see it, the g20 reform effort for otc derivatives has three broad goals : reduce systemic risk with respect to otc derivatives activities ; improve the ability to aggregate and analyze over - the - counter derivatives otcd risk exposures across markets, institutions and product classes ; and improve competition and protect against market abuse. systemic risk is being reduced in a number of different ways. first, mandating the standardization, whenever possible, and central clearing of otc derivative trades can reduce risk by transforming a complex web of bilateral firm exposures into a smaller set of net exposures between each dealer and the central counterparty ( ccp ). given their role in fostering financial stability, robust financial market infrastructures ( fmis ) that are properly risk - managed can serve as a source of strength in times of stress. central clearing can also reduce systemic risk by requiring collateral from the participants. to the extent that the otcd reform effort results in the greater use of collateral, that should also help make the system safer. second, increasing capital and liquidity requirements, improving governance, risk management, and resolution and recovery, as well as implementation of the principles for financial market infrastructures ( pfmis ) promulgated by the committee on payment and settlement systems ( cpss ) and the international organization of securities commissions ( iosco ) should make fmis more robust and resilient. fmis performed well during the financial crisis, but with otcd reform, we are asking fmis to do even more, so the bar needs to be higher. third, firm