LONDON, June 20 (Reuters) - Two of the world’s top derivatives industry bodies are joining forces to benefit from rule changes that put them head to head with banks, which have hitherto dominated trading in the sector.
The largest part of the derivatives market, worth some $633 trillion, is traded privately among 15 or so banks but regulators want to move chunks of it onto trading platforms and through clearing houses.
London-based Futures and Options Association and its Washington counterpart, the Futures Industry Association, will combine to form FIA Global, representing some brokers and organisations that use formal platforms to trade derivatives.
Such organisations are set to benefit from new regulation and a combined body will have greater clout to counter the voice of the International Swaps and Derivatives Association (ISDA), which is backed by the world’s top banks.
Regulators want to increase transparency on risks that were hard to spot during the financial crisis.
“This new affiliation will address a major industry concern - the fragmentation of derivatives markets along jurisdictional lines,” said Walt Lukken, chief executive of the FIA.
The FIA’s Asia affiliate will be part of the new group.
Much trading in the sector has a cross-border element and derivatives regulators from across the world are meeting in Montreal on Thursday to find a common approach to supervision and avoid costly overlaps for market participants.
The announcement of a tie up is timed for the annual London Derivatives Week starting on June 25 where regulatory change is set to dominate the agenda.
(Reporting by Huw Jones; Editing by Ruth Pitchford)
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