Brussels, 02/09/2013 (Agence Europe) - On Friday 30 August, ahead of the G20 summit, ten jurisdictions (Australia, Brazil, the United States, Japan, Hong Kong, Ontario, Quebec, Singapore, Switzerland and the European Union) set out common principles to avoid over-the-counter derivative reforms having a negative impact in other countries.
The jurisdictions stress that much progress has been made since the G20 summit in Pittsburgh in 2009, with legislative reform breathing greater transparency into the market and reducing the risks to the global market due to be implemented soon, stating in a joint press release that: “Rulemaking should be complete in all our jurisdictions in 2014 or early 2015”. They recognise, however, that “in the absence of appropriate coordination, our respective cross-border rules and implementation schedules could cause market disruption and fragmentation, reduced liquidity in certain markets and the concentration of risks within certain jurisdictions”.
Among the common principles listed, based on the EU-United States agreement of July (see EUROPE 10886) is a “stricter-rule” approach to address gaps in mandatory trading or clearing obligations. For example, where participants or products are subject to mandatory trading or clearing obligations in one regime but not another, transactions involving such participants or products would need to comply with such obligations, even if the two regimes are otherwise considered to be equivalent or comparable. Jurisdictions should remove barriers to greater transparency (laws on banking secrecy or data protection, penal code, etc.) so that foreign financial players can inform national bodies of transactions in line with transparency requirements that apply to those foreign players. There should be appropriate transitional measures and a reasonable but limited transition period for foreign entities to implement OTC derivatives reforms. Beyond the transition period, national players would not be allowed to refuse to communicate details of a foreign counterparty to the supervisory authorities on the grounds that this is banned by the law of the other country. (MB/transl.fl)