In a statement following the release of the European Commission's consultation papers on OTC derivatives, ISDA says some derivatives are simply not eligible for clearing. But it strongly supports the principles that clearing houses should be robust.

ISDA also supports proposals that will require the use of, and reporting to, trade repositories for OTC derivatives. "The industry's goal is to provide supervisors with a complete view of the OTC derivatives market, both cleared and uncleared trades, across transactions, firms and counterparties," it notes.

Approximately US$9trn of CDS trades and over US$210trn of interest rate swaps have been centrally cleared, according to ISDA. The organisation and 14 large market participants in September 2009 committed to clearing 95% of new eligible CDS trades and 90% of new eligible IRS.

In addressing the attention paid to sovereign CDS and the extent to which naked sovereign CDS dictates prices of underlying bonds, ISDA also comments that it is "...difficult to believe that the far smaller CDS market has had an undue influence on cash bond markets that are 70 times bigger".

The EC's consultation focuses on possible measures to enhance the resilience of derivatives markets, as well as options to be considered for a future proposal that would deal with potential risks arising from short selling and CDS.