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EC adopts US CCP equivalence

The only recently-acknowledged elephant of EU-US CCP lack of equivalence is one step closer to leaving the room. The European Commission has today granted the CFTC status as an equivalent regulatory regime for CCPs. The determination will be effected by a legally-binding implementing act in accordance with Article 25(6) EMIR. The decision follows the 10 February 2016 joint statement by CFTC Chair Timothy Massad and the EC’s Commissioner Jonathan Hill on a shared approach to transatlantic clearers. The grant of country/regulator equivalence is the vital first step in US CCPs obtaining recognition by ESMA on an individual basis, allowing them to benefit from the fractional capital charges attendant on QCCP status. Commissioner Hill said,

“This is an important step forward for global regulatory convergence and implementing our agreement with the CFTC. It means that US CCPs, once recognised by ESMA, can continue to provide services to EU companies. We look forward to the CFTC’s forthcoming decision on substituted compliance which will allow European CCPs to do business in the United States more easily”.

There is little to argue with this statement, it is indeed an important step forward etc. though the road to “global regulatory convergence” remains long. Substantive differences between the two largest markets remain on such diverse and substantive issues as: extra-territoriality, package trades, data harmonisation and trading platforms. It is to be hoped that this recent outbreak of amity will result in an expedited resolution of these and other questions.

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