"Following the global financial crisis, the G20 committed to improve the regulation and supervision of over-the-counter (OTC) derivatives markets as part of efforts to strengthen the international financial regulatory system. MAS announced in July 2011 that it will meet the objectives set by G20 as well as recommendations by the Financial Stability Board (FSB) on the implementation of these objectives. MAS proposes to expand the scope f the Securities and Futures Act, Chapter 289 (SFA) to regulate OTC derivatives: (a) mandate the central clearing and reporting of OTC derivatives; (b) extend the current regulatory regimes for market operators, clearing facilities and capital markets intermediaries to OTC derivatives; and (c) introduce a new regulatory regime for trade repositories."--Preface.

In this work, Christopher Chen examines and compares the regulation of over-the-counter derivatives in Hong Kong and Singapore, the two largest international financial centres in Asia Pacific. Chen analyses current or proposed regulations on trade reporting, centralised clearing and mandatory exchange trading mandates regarding OTC derivatives against the backdrop of reforms of international financial regulatory structure after the global financial crisis. The article also relates the reforms in Asia to development in major Western markets such as the US, the UK or the European Union. Apart from technical comparison and dissecting of content of rules from different angles, his work also examines the rationale behind those reforms and policy concerns behind Asian adoption of the regulatory mandates prescribed by G20 as well as potential policy concerns (such as competition and extraterritoriality) in a market that is dominated by Western banks.

In the wake of the ongoing credit crisis, policy makers are considering whether the regulation of over-the-counter (OTC) derivatives could help avert another such crisis and taxpayer-financed bailout. In particular, the Treasury Department has proposed to subject OTC derivatives to comprehensive regulation and to mandate the exchange trading and central counterparty clearing and settlement of standardized OTC derivatives. This paper explores the regulatory, operational, and economic aspects of the clearing and settlement of OTC derivatives and the likely consequences of the Treasury Plan. I contend that the proposal to mandate central counterparty OTC clearing for standardized products will not likely avert another potential crisis or failure of a large financial institution, but will likely engender significant legal and regulatory uncertainty, impede financial innovation, raise market participants' costs, and adversely impact the competitiveness of U.S. derivatives participants. To address systemic and payment system concerns, improvements in the consolidated enterprise-wide supervision and regulation of certain financial institutions (across all of their risk-taking activities) will likely prove more effective and less disruptive than new product-based regulations.

Recent regulatory efforts, especially in the U.S. and Europe, are aimed at reducing moral hazard so that the next financial crisis is not bailed out by tax payers. This paper looks at the possibility that central counterparties (CCPs) may be too-big-to-fail entities in the making. The present regulatory and reform efforts may not remove the systemic risk from OTC derivatives but rather shift them from banks to CCPs. Under the present regulatory overhaul, the OTC derivative market could become more fragmented. Furthermore, another taxpayer bailout cannot be ruled out. A reexamination of the two key issues of (i) the interoperability of CCPs, and (ii) the cost of moving to CCPs with access to central bank funding, indicates that the proposed changes may not provide the best solution. The paper suggests that a tax on derivative liabilities could make the OTC derivatives market safer, particularly in the transition to a stable clearing infrastructure. It also suggests reconsideration of a "public utility" model for the OTC market infrastructure.