French watchdog warns London on OTC derivatives-FT

July 20, 2009

    LONDON, July 20 (Reuters) – Disagreements between Paris and London over the regulation of over-the-counter (OTC) derivatives markets could drive business to the United States, a top French regulator told the Financial Times on Monday.
   Jean-Pierre Jouyet, chairman of the French stock market watchdog AMF, said differences between Britain and France about the $600 trillion global market could hinder a European solution.
   “In the U.S. they have seen the threat,” he said. “They are creating centralised clearing houses, but in Europe we are not there because there is disagreement between Paris, London and Frankfurt.”
   The European Commission published draft policy proposals earlier this month to make OTC derivative markets safer through greater standardisation and central clearing of contracts.
   Jouyet said London had to accept that Paris had a role in the business of clearing trades in euro-denominated derivatives, while Frankfurt was more neutral in the debate.
   “If Europe cannot agree and falls behind, trading will be done with the clearing system of the U.S.,” Jouyet said.
   Britain, which is not a member of the euro zone, is Europe’s biggest centre for trading off-exchange derivatives and dealers warn the market could be fragmented by many clearers.
   The European Commission opened an investigation into the sector last October, a month after the collapse of Lehman Brothers, a bank heavily involved in off-exchange derivatives.
    (Reporting by Tim Castle; Editing Bernard Orr)
   ((; +44 207 542 7947; Reuters Messaging: Keywords: FRANCE REGULATION/
Monday, 20 July 2009 03:00:46RTRS [nLK661001 ] {C}ENDS

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