Singapore’s central bank said on Monday it is proposing to force many over-the-counter (OTC) derivative trades to be centrally cleared, a move aimed at trying to reduce the level of risk posed by one of the most opaque areas of finance, report Reuter.
The reforms are in line with the pledges made by the Group of 20 leading economies in the wake of the collapse of Lehman Brothers. Their goal is to make it easier to supervise derivative trading and reduce the risk one failed financial institution could pose to the wider finance system.
But Singapore, whose OTC derivative market has around US$9.8 trillion ($12.3 trillion) in outstanding contracts, is not currently planning to mirror the reforms taken by the United States and Europe by forcing such products to be traded on exchanges or electronic platforms.
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