The European Commission just released it's communication on derivatives. It is actually a reasonably well thought out paper, though misguided in a few places:
ISDA immediately responded. Here is a quote from the response that goes to the heart of the matter (that we've discussed numerous times on Sober Look):
ISDA welcomes the Commission’s Communication as the Association has a strong interest in the central clearing of CDS as one part of a strong and healthy market. At the same time, ISDA values recognition by regulators of the continuing need for bilateral customised transactions which by their nature are not suited for clearing.
ISDA believes that those exposed to credit risk should have the option to choose the type of transaction that best suit their business and risk management needs, as works so well for customers in the equity, interest rate, commodity and FX sectors. Removing that flexibility, such as by forcing bilateral participants to trade on an exchange or otherwise limiting the availability of customized risk management solutions, would be a step backwards.