An integrated financial market at European level plays a crucial role in making European businesses more competitive and generating growth and jobs. A single, deep and liquid capital market can eliminate inefficiencies in the financial system, increase returns on savings and reduce the cost of borrowing.
The economic and financial crisis that occurred in 2008 revealed that more needed to be done to improve the safety, security and efficiency of capital markets. To this end, the Commission set out an ambitious roadmap of measures to regulate financial services for sustainable growth and to ensure more responsibility and competitiveness in the European Financial Sector.
Competition rules apply to capital markets in the same way as to any other industrial or services sector. Whilst recognising and respecting the fact that financial institutions have special responsibilities which are regulated appropriately, they still must respect competition rules.
Over-the-Counter (OTC) Derivatives and Credit Default Swaps
The lack of transparency in trading derivatives and financial instruments Over the Counter (OTC) became apparent during the financial crisis of 2008. Over-the-Counter (OTC) derivative contracts are not traded on an exchange (for example the London Stock Exchange), but instead they are privately negotiated between two counterparts (for example a bank and a manufacturer). In September 2009, at the G-20 Pittsburgh Summit, the leaders of the 19 biggest economies in the world and the European Union agreed that, "all standard OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest." Furthermore, they acknowledged that, "OTC derivative contracts should be reported to trade repositories and that non-centrally cleared contracts should be subject to higher capital requirements."
In 2012, the European Commission put forward a proposal for a Regulation on Over-the-Counter derivatives and Market Infrastructure.
Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories entered into force on 16th August 2012
Commission Delegated Regulation (EU) 2021/1456, supplementing Regulation 648/2021, entered into force on 2nd June 2021