Brussels, 07/06/2013 (Agence Europe) - Europe wants the United States to hold back and not introduce its planned new rules next month for derivatives, which the EU says would discriminate against operators outside the United States. It is urging the US to await the G20 summit, where a global solution can be reached.
In the United States, new rules are planned to come into force on Friday 12 July that might force European operators, along with various post-market operators, to carry out their derivatives deals on US stock markets if one of the parties to the deal is subject to US law.
Such an obligation would come into force because the United States refuses to recognise the equivalence of European rules (the EMIR regulation 648/2012). The EU adopted the regulation to put into practice the G20's decision to make the derivatives market more transparent and secure. This market has a turnover of more than €600 trillion a year and problems with this market exacerbated the financial crisis of 2008.
Europe is not happy about the US plans. A European source said that global solutions were needed for a global problem and the global rules needed to be coherent. The source talked of the extra costs for European operators if the US rules come into force because Europeans would have to comply with the rules of both the EU and the US. Requiring some transactions to be carried out in the United States would force a substantial source of European cash-flow to shift to the United States at a time when the EU needs the money to kickstart its economy, added the source. He said that the financial markets are already taking measures to get round the planned new US rules. Another European official said the United States wanted to act fast to present their partners with a fait accompli, saying that this was not the right way to decide on rules cooperatively.
Europe says the only solution to the problem is to get the United States to admit that their rules cannot operate outside their own country. The first source said that the US has to be forced to accept that the EU rules are similar to those introduced in the United States.
The big international players want to find a solution ahead of the G20 summit in St Petersburg in September. In April, eight countries (Germany, South Africa, Australia, Brazil, Japan, the United Kingdom, Switzerland and Russia) and the European Commission set out their concerns to the United States in a letter. On Tuesday 4 June, the European Commission and ESMA sent their own letter to the US asking for the CFTC, the US regulator, to put its plans on hold. In Montreal on Monday 20 June, a meeting of ODRG, the group of global derivatives watchdogs, will try to find a solution. EU Internal Market Commissioner Michel Barnier is certain to raise the matter at meetings in Washington on 15 and 16 July. (MB/transl.fl)