William Brodsky, Chairman and CEO of the CBOE and Chairman of the World Federation of Exchanges, shares his views on OTC derivatives in the Financial Times’ "Trading Room"

• Unregulated OTC derivatives may not have started last year’s financial crisis, but they acted as a powerful accelerant to the subprime crisis
• With 471 trillion in notional value, the global derivatives market is more than five times larger than the global equities and bond markets combined
• In contrast to OTC derivatives, regulated exchanges continued to provide transparency, price discovery, certainty of execution and protection against counterparty risk through centralized trading and clearing
• Regulated exchanges delivered as promised: no failures, no closures, no taxpayer rescues
• In order to minimize systemic risk and create a well-functioning derivatives market, governments must legislate trading of OTC derivatives on liquid and organized markets
• The threat of cross-border regulatory arbitrage is real
• Governments and regulators have the means to avert the next disaster

FT Trading Room | View Full Op-Ed Article

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