Everyone you talk to in the market today raises the same concerns: rising costs and increased regulation are increasing barriers across the derivatives industry.
Everywhere you look, the barriers are rising: rising costs means fewer new entrants into the market, increased monopoly of infrastructure provision is raising the barrier to competition and new rules on capital are increasing the barriers for some firms to service clients.
The derivatives industry is in a new post-crisis era.
The post-crisis era is defined by a long-term low rate environment, increased fragmentation of liquidity and greater regulatory oversight.
But the business models that have emerged in the new era for market participants and infrastructure providers are not creating a sustainable future for the industry.
If costs continue to rise and the number of players in the market continues to fall, the market will dwindle to nothing.
There is a need for radical reform of the market. But to be sustainable, this reform must not come from regulators but from the market itself.
New models for co-operation need to be built, re-mutualisation and democratisation must take centre stage as a new era is built on firmer foundations than the current one.
FOW, in partnership with Object Trading, today publishes a new whitepaper exploring how the barriers to entry have risen since the financial crisis and asks what can be done to bring them down.
To download your free copy, click here.