Publication: Working Paper Series No. 126

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EBI is happy to announce a contribution of Evariest Callens (Ghent University) and Klaus Löber (European Securities and Markets Authority) in the EBI Working Paper Series No. 126. Their paper entitled “The Future of Centrally Cleared OTC Derivatives Markets” was published on 18 July 2022.

The central clearing sector acts as a bulwark against systemic instability. It sits at the heart of modern financial markets and is particularly exposed to the speed of the ever-evolving financial system. Based on recent evolutions and policy initiatives, the paper aims to formulate conjectures about the directions in which centrally cleared over-the-counter (OTC) derivatives markets may develop in the future. Given the inherently forward-looking nature of this paper, the authors’ analysis is necessarily limited in that it employs incomplete information about the future in an attempt to map future risks, challenges, and opportunities in centrally cleared OTC derivatives markets. The paper is structured around (i) emerging risks (cyber risk, environmental risk, new technologies, and legal risk); (ii) challenges that come with the friction between an increasingly cross-border market for centrally cleared OTC derivatives and a regulatory and supervisory approach towards CCPs that has remained largely domestic or regional; and (iii) potential future directions for CCP governance.

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