MEXICO CITY, Dec 18 (Reuters) - Rules aimed at boosting oversight of Mexican derivatives trades and pushing most transactions through a central clearing house will soon be published, Mexico’s banking regulator said on Wednesday.
Mexico’s central bank, finance ministry and banking regulator have been working on swaps rules agreed to in general by Group of 20 economic powers after risky derivatives trading helped fuel the 2007-2009 financial crisis and led to multi-billion dollar taxpayer bailouts.
Bernardo Gonzalez, Vice President for regulatory policy at Mexico’s banking regulator, said a rule laid out by the three agencies regulating clearing houses would soon be sent to Cofemer, an agency that oversees regulation issues in Mexico.
“This week we are about to send the rule, already agreed to by the market, to Cofemer and once it’s authorized, the rule would be published,” he said at a press conference.
The regulation, he said, lays out requirements for clearing houses in areas such as corporate governance, operations, auditing and security.
After being sent to Cofemer, the regime would be analyzed and presented for outside comment, Gonzalez said. Once a final version is agreed to, it would go into effect after being published in the Federal Register.
Another rule regulating brokers on issues such as corporate governance will be issued by the banking regulator and sent to Cofemer alongside the clearing house regulation, Gonzalez added.
The opaque derivatives trades that shook U.S. banks during the financial crisis also dealt a harsh blow to Mexican companies.
Cement maker Cemex nearly went bust and retailer Comerci filed for bankruptcy protection in the United States when their risky derivatives bets exploded, sparking concerns that more firms were hiding huge derivatives losses.
Gonzalez said authorities were also planning to issue rules that regulate the amount of capital and margin market players have to set aside to assure against potential losses, but the measures would not by ready until at least next year.
He added that U.S. and Mexican banking regulators were “in discussions” over a memorandum of understanding that would allow the U.S. to depend more on Mexican rules in cases of cross border transactions.
Despite broad agreement on the framework for regulation of the $630 trillion global derivatives market, one of the most controversial issues has been how rules apply abroad, particularly as regulators in some countries have taken longer to roll out their oversight plans than the United States.