In light of these events, global policymakers and the leaders of the G20 group of major economies are working to address the weaknesses in the OTC derivatives markets while preserving the benefits they offer. I welcome this type of international cooperation and believe that it is essential given that today’s markets operate on a cross-border basis and there is an imperative to minimize the potential for regulatory arbitrage.

Although most of the focus around trading OTC derivatives has been on events in the U.S. and Europe, I believe that financial centers in Asia such as Singapore and Hong Kong have developed their own unique niches in safely and effectively trading these contracts. While these markets in the Asia Pacific region offer a more tax- and regulation-friendly environment, they are fully committed to the G20 initiatives and processes and have declared that there is no room for regulatory arbitrage.

The recommendations of the G20 include increased standardization of derivative contracts, a move to central clearing, execution of trades on electronic platforms and reporting to trade repositories. These changes will improve transparency, mitigate risk and protect against market abuse. Non-centrally cleared contracts, typically bespoke products, would be subject to higher capital requirements to reflect their greater level of counterparty risk.

I think that the supervision and regulation of OTC derivatives will create an even more prominent role for communications and networking solutions, which already form the backbone of capital markets.

I anticipate an explosion of market data, proliferation of liquidity venues, more competition, better prices and increased pre-trade and post-trade transparency. Electronic trading venues would need to connect to each other and to clearinghouses and trade repositories. The OTC derivatives market of tomorrow may very well look like today’s equity markets.