TY - BOOK ID - 84542955 TI - Making OTC Derivatives Safe—A Fresh Look PY - 2011 SN - 146232231X 1455299669 1283568128 9786613880574 1455225088 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Derivative securities KW - Financial risk management KW - Risk management KW - Law and legislation. KW - Data processing. KW - Banks and Banking KW - Finance: General KW - Industries: Financial Services KW - Financial Institutions and Services: General KW - Banks KW - Depository Institutions KW - Micro Finance Institutions KW - Mortgages KW - Pension Funds KW - Non-bank Financial Institutions KW - Financial Instruments KW - Institutional Investors KW - General Financial Markets: Government Policy and Regulation KW - Finance KW - Banking KW - Systemically important financial institutions KW - Collateral KW - Central counterparty clearing house KW - Systemic risk KW - Financial services industry KW - Loans KW - Clearinghouses KW - Banks and banking KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84542955 AB - Recent regulatory efforts, especially in the U.S. and Europe, are aimed at reducing moral hazard so that the next financial crisis is not bailed out by tax payers. This paper looks at the possibility that central counterparties (CCPs) may be too-big-to-fail entities in the making. The present regulatory and reform efforts may not remove the systemic risk from OTC derivatives but rather shift them from banks to CCPs. Under the present regulatory overhaul, the OTC derivative market could become more fragmented. Furthermore, another taxpayer bailout cannot be ruled out. A reexamination of the two key issues of (i) the interoperability of CCPs, and (ii) the cost of moving to CCPs with access to central bank funding, indicates that the proposed changes may not provide the best solution. The paper suggests that a tax on derivative liabilities could make the OTC derivatives market safer, particularly in the transition to a stable clearing infrastructure. It also suggests reconsideration of a "public utility" model for the OTC market infrastructure. ER -