ISDA has published a paper recommending that the EU and the UK recognize the equivalence of each other’s derivatives trading venues in order to mitigate the impact of the UK’s withdrawal from the EU.
If
appropriate equivalence decisions are not in place by the end of the
transition period provided for in the Withdrawal Agreement between the
EU and the UK (the transition period), there will be significant issues
for counterparties subject to the derivatives trading obligation (DTO)
and other requirements under derivatives legislation in both the EU and
the UK. The lack of such equivalence decisions is also likely to
exacerbate the fragmentation of liquidity in over-the-counter (OTC)
derivatives markets between the EU and the UK resulting from Brexit.
The paper explains that equivalence is the best solution for
addressing conflicts and avoiding such fragmentation, by setting out the
limitations of the other mitigating actions that have been proposed in
the event that equivalence is not granted.
Click on the PDF below to read the letter in full.
for ISDA Analysis of the Impact of Brexit on the MIFID Derivatives Trading Obligation
Impact of Brexit on the Derivatives Trading Obligation(pdf)
ISDA
© ISDA - International Swaps and Derivatives Association
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