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Authors: Han Kun Law Offices Ting Zheng丨Eryin Ying丨Shirley Liang Overview and Background Following the economic and financial crisis in 2007, in view of the significant weakness in the resiliency of banks and other market participants to financial and economic shocks, in particular from over-the-counter (OTC) derivatives transactions, the Group of Twenty (G20) agreed on the necessity of improved transparency in the OTC derivatives markets and further regulation of OTC derivatives, and initiated a reform programme in 2009 to reduce the systemic risk from OTC derivatives which comprise of the following four elements: (1) All standardised OTC derivatives should be traded on exchanges or electronic platforms, where appropriate. (2) All standardised OTC derivatives should be cleared through central counterparties (CCPs). (3) OTC derivatives contracts should be reported to trade repositories. (4) Non-centrally cleared derivatives contracts should be subject to higher capital requireme
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