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You know something needs a fix when regulators, who love to crack down, and trade groups, who defend their constituents, come together to argue that major changes are necessary.

Such a scenario is now playing out in the derivatives world.

Four years ago G-20 leaders descended on Pittsburgh to solve the derivatives conundrum – in other words, to find ways to prevent the complex, opaque securities from nearly bringing down the global financial system again.

By the end of the meeting there was a clear cut framework. Derivatives contracts would need to be reported to trade repositories, so that everyone could see what was in the market, and non-centrally cleared contracts would need to be backstopped by more capital. Pretty straightforward stuff.

Four years later there's been some major legwork. As the European Central Bank recently noted, the central clearing and reporting obligations have been met in major markets, including Europe, where all derivatives contracts must be reported, and in the U.S. and Japan, where swap transactions must be. Those are big steps.

But with all this progress, is it fair to say the Pittsburgh goals have been reached? Benoît Cœuré, an ECB executive board member recently tackled that question in a speech. His unequivocal answer: no, and we're not even close.

On the transparency front, national privacy laws and indemnification clauses have served as major roadblocks because they create disparities in country-to-country reporting requirements. Possibly even more troubling is the fact that regulators aren't able to aggregate trading data across the different repositories and markets.

Mr. Cœuré also worries that the problems are being solved on national fronts, rather than globally – something that doesn't work for an interconnected derivatives market. This is especially true when it comes to derivatives clearing -- or settling trades between parties -- because so much of it happens across borders. Outside the EU, "virtually no progress in cooperative oversight or even in terms of pure information-sharing has been achieved for several major global central counterparties," Mr. Cœuré argued.

Too often such cries for help are denounced by the affected trade groups, but in this case ISDA, the International Swaps and Derivatives Association, is on board. In a letter Monday, ISDA stated that it agrees the Pittsburgh goals are far from being reached.

However, it put the issue back on the regulators a bit. "Regulatory (or quasi-regulatory) processes where there is a real, interactive debate with industry and other interested parties – such as those which first enabled development of trade repositories – are healthy, and achieve results. They create shared understanding of regulators' goals, and help everyone to build towards them," the letter said. The implicit message: start talking to us and we'll help you solve the problems, rather than issuing directives from on high.

Whether the two sides make inroads remains to be seen. But at least the major opposition is on board with the fix.

(Tim Kiladze is a Globe and Mail Reporter.)

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