CFA Institute commented on the International Organization of Securities Commissions’ (IOSCO) and the Bank for International Settlements’ (BIS) consultative report “Guidance on the application of the 2004 CPSS-IOSCO Recommendations for Central Counterparties.”

CFA Institute is of the opinion that all standardized and standardizable OTC contracts should be subject to central clearance. Although central clearing concentrates counterparty risk in an entity specifically chartered to handle it, it does not solve all problems associated with OTC trading. More notably central clearing does not provide price discovery, transparency, or regulatory oversight. Consequently, CFA Institute promotes provisions requiring all standardized OTC derivatives to be traded on regulated exchanges.