Saturday, July 19, 2014

E.U. Securities Commissioner to Propose Equivalency Decision on Derivatives Central Counterparties upon Successful Conclusion of Talks with CFTC

E.U. Commissioner for the Internal Market Michel Barnier said that he will soon propose that the European Commission adopt equivalence decisions on decisions on derivatives counterparties with a number of jurisdictions including the United States, but the U.S. will not be in the first round. In a statement, the Commissioner said that he intends to propose shortly that the European Commission adopt equivalence decisions that will allow derivatives central counterparties from five countries outside the EU, Japan, Singapore, Australia, Hong Kong and India, to clear E.U. derivatives trades. Equivalence decisions for other countries should follow shortly afterwards, said the Commissioner, including the U.S., whose central counterparties he described as truly global market infrastructures. He emphasized that the equivalence decisions will be done in full deference to the rules and regulatory regimes of those countries.

Commissioner Barnier also noted that technical talks with the CFTC are progressing well and he is confident that the E.U and the CFTC will be able to agree on outcomes-based assessments of their respective derivatives regulations and on aligning key aspects of margin requirements to avoid arbitrage opportunities. If the CFTC also gives effective equivalence to third country central counterparties, deferring to strong and rigorous rules in jurisdictions such as the E.U., the European Commission will be able to adopt equivalence decisions very soon, he predicted.