Brussels, 30/10/2014 (Agence Europe) - The European Commission says that the central counterparty (CCP) rules in four countries (Australia, Hong Kong, Japan and Singapore) are equivalent to the CCP rules in force in the European Union.
The CCPs in these four countries will be able to obtain recognition in the EU, and can therefore be used by market participants to clear standardised OTC (over-the-counter) derivatives as required by EU legislation (EU Regulation EMIR 648/2012), whilst remaining subject solely to the regulation and supervision of their home jurisdiction. Although rules may differ in the detail, the Commission explains that international regulators are pursuing the same objectives to promote financial stability by promoting the use of CCPs that are subject to robust prudential requirements.
EU Internal Market Commissioner Michel Barnier issued a press release stating: “Globally agreed reforms of derivatives markets - like all financial services reforms - will only work in international markets if regulators and supervisors rely on each other. Today's decisions show that the EU is willing to defer to the regulatory frameworks of third countries, if they meet the same objectives as EU rules. We have been working in parallel on assessing twelve additional jurisdictions and finalising those assessments is a top priority. This includes the United States: we are in close and continued dialogue with our colleagues at both the SEC and CFTC as we develop our assessments of their respective regimes and discuss their approaches to deference.”
The European Commission begins its assessment for equivalence if a CCP from a third country seeks recognition from the European Securities and Markets Authorities (ESMA). (MB)