Michel Barnier, European Commissioner for Internal Market and Services, has issued a statement on the regulation of global derivatives markets.
He states that the G20 and international standard setters have made remarkable progress over the past five years in adopting international principles for the regulation of the global derivatives markets, and that these must now be fully implemented by regulators. He believes that a final push is now required by regulators to agree how “deference” to each other’s rules will work in practice.
Mr Barnier intends to propose that the European Commission adopt “equivalence” decisions that will allow central counterparties (CCPs) from five countries outside the EU (Japan, Singapore, Australia, Hong Kong and India) to clear EU derivatives trades. This will be done in full deference to the rules and supervisory systems of those countries.
Decisions for other countries should follow shortly afterwards. Mr Barnier is confident that this will include the USA. He reports that technical talks with the Commodity Futures Trading Commission (CFTC) are progressing well and he is confident that they can agree on outcomes-based assessments of rules and on aligning key aspects of margin requirements to avoid arbitrage opportunities. If the CFTC also gives effective equivalence to third country CCPs, deferring to strong and rigorous rules in jurisdictions such as the EU, he believes that the EU will be able to adopt equivalence decisions very soon.
View Statement by Commissioner Barnier on global derivatives regulation, 27 June 2014