LONDON - A study by a influential research group has concluded that no fundamental regulatory changes are needed for the derivatives markets.
But the report, by the organization known as the Group o 30, urged senior managements to take an active role in overseeing their firms' activities in swaps, options, and other sophisticated instruments.
The study was initiated about a year ago in response to growing alarm among banking regulators worldwide about the rapid growth of the largely unregulated market.
Conflicts Denied
At a press conference, Group of 30 members denied that they had a vested interest in the outcome of their study, even though many who participated in it are derivatives practitioners.
Dennis Weatherstone, chairman of J.P. Morgan & Co. and a founding member of the Group of 30, said 30% of senior managers are not sufficiently informed or involved in their respective firm's activities in derivatives.
The report makes 20 recommendations, several already widely employed by the industry. Other suggestions mirror those made in the past year by central banks and industry regulators.
Among the recommendations are that market players should "determine at the highest level" the scope of involvement in derivatives and the policies that should be applied.
It also suggests that "only professionals" with the appropriate skills be involved in derivatives, which are viewed as far more complex than the underlying currency, stock, and bond markets.
