Economic Commentary: The derivative market is facing major changes

Date 10/12/2012

The OTC derivatives market fulfils an important function in the financial system. Consequently, risk management must be good and transparency high in this market. An EU regulation aimed at achieving just this has recently entered into force. Firstly, the regulation entails an improvement of risk management on the market, among other areas through the use of central counterparties. Secondly, it entails an increase in transparency in that it places requirements on the reporting of transactions. It is important for financial stability in Sweden that the Swedish market participants adapt to these new requirements. Consequently, the Riksbank conducted a study in 2012 of how Swedish market players use the OTC derivatives market and how they are preparing for upcoming changes to it. The results of this study are presented in this Economic Commentary.