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13 September 2013

Euroclear: OTC watchdogs pledge to work together on transnational trading


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Financial market regulators from the US, Europe and a number of other core markets from around the world have drawn up a joint report in which they pledged to combine their efforts in setting the rules for cross-border trade in OTC derivative instruments.


The document, released by the US Commodity Futures Trading Commission, comes in response to urges from central bank governors and finance ministers from the G20 to work harder towards settling cross-border trading disputes. It also follows a period of increased pressure between the CFTC and the European Commission regarding their treatment of the concept of substituted compliance.

Among the points on which the regulators reached an understanding were the move towards a more outcome-focused approach in assessing substituted compliance eligibility, as well as conducting advance consultations among the relevant regulatory bodies regarding substituted compliance or equivalence cases.

The watchdogs also agreed on a consultation framework for obligatory clearing determinations and on applying a tougher approach in enforcing the rules in cases of discrepancies between regulation and individual cases of mandatory trading and clearing obligations. Also, they stated that governments should remove hurdles that market players meet when reporting to trade repositories and ease regulatory authorities' access to the data trade repositories store.

Signatories include the European Union, Switzerland, the US, Brazil, Australia, Japan, Hong Kong, Singapore, Quebec and Ontario.

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