An October IMF working paper has linked heavy bank trading to market risks if financial deepening occurs, as it emerges that over-the-counter (OTC) derivatives trades are set to avoid US and European market infrastructure regulations. Speaking at a conference at end October, Manmohan Singh, a senior economist at the Fund, said his research shows that the OTC derivatives market has a collateral shortfall worth around $2 trillion, of which a large chunk is thought to be related to sovereign trades. Failing to regulate the market will increase risks and allow sovereign wealth funds and local municipalities to “free ride the system”, said Singh, and pose threats to exposed economies, such as Portugal.