The OTC Derivatives Regulators Group (ODRG) has published a report which provides an update to the G20 on further progress in resolving OTC derivatives cross-border implementation issues. For the November 2014 G20 Leaders summit the ODRG will report on how it has addressed or intends to address identified cross-border issues.

Continuing to develop approaches

In the report the ODRG notes that it has previously identified two areas in which it is working to develop approaches to address cross-border issues:

  • potential gaps and duplications in the treatment of branches and affiliates; and
  • treatment of organised trading platforms and implementation of the G20 trading commitment.

In relation to the first issue the ODRG states that it is still considering how equivalence and substituted compliance decisions should be taken in the context of transactions involving affiliates. The ODRG will consider whether any of the approaches for affiliates may also be appropriate for branches.

In relation to the second issue the ODRG recognises that there are different ways to regulate organised trading platforms and agrees that organised trading platforms, regardless of their location, that are recognised or have an applicable license, registration, permission or exemption in a jurisdiction should be able to be used to comply with a trading commitment of that jurisdiction. It also agrees that whenever possible, and consistent with applicable laws and regulations, the details of laws and regulations applicable to foreign organised trading platforms should be made clear before their implementation. The ODRG believes that enhancing clarity and predictability of the details of applicable laws and regulations for various stakeholders should help reduce regulatory uncertainty and avoid unnecessary burdens and unintended consequences. The ODRG agrees that there should be appropriate transitional measures and a reasonable but limited transition period for foreign organised trading platforms.

Understandings already reached

The ODRG also notes in the report that it has previously identified four areas in which it is working to implement understandings previously reached:

  • equivalence and substituted compliance;
  • clearing determinations;
  • risk mitigation techniques for non-centrally cleared derivatives transactions (margin); and
  • data in trade repositories and barriers to reporting to trade repositories.

In relation to the final bullet the ODRG has identified two issues: (a) reporting information to trade repositories; and (b) authorities accessing information from trade repositories. On the former, the ODRG and the Financial Stability Board (FSB) have noted that there are barriers that can prevent reporting to trade repositories, and have called for jurisdictions to remove such barriers with particular attention to removing barriers to the reporting of counterparty information. The ODRG has asked the FSB to make a clear statement that jurisdictions need to remove all barriers that prevent reporting of counterparty identifying information and discuss the setting of a deadline by which such barriers are addressed.

View Report of the OTC Derivatives Regulators Group on cross-border implementation issues, 11 September 2014