16 January 2015

US-EU financial markets regulatory dialogue joint statement

Recognizing the continued importance of US and EU markets for the growth and stability of the international economy, participants welcomed the progress made by US and EU authorities since the crisis to bolster the resilience of financial markets and reiterated their unswerving commitment to work together to advance financial regulatory reform in a consistent and convergent manner.

EU and US participants held productive discussions on an extensive agenda, including topics related to those commitments made by the G-20 Leaders: implementation of Basel III capital, leverage, and liquidity rules; implementation of over-the-counter (OTC) derivatives reforms (including a discussion of cross-border issues); and recent policy developments on cross-border resolution.

Participants reiterated the need for all G-20 jurisdictions to continue to address and implement OTC derivatives reforms in a timely manner. Participants also reaffirmed that jurisdictions and regulators should be able to defer to each other, consistent with the St. Petersburg Declaration. Participants highlighted EU and US efforts to implement OTC derivatives reforms and their continued efforts to settle remaining issues related to cross-border market participants, transactions, and infrastructures. Both sides welcomed the extension of the transitional period for capital requirements for exposures to central counterparties (CCPs). The extension allows the EU to continue to engage with CFTC and SEC staffs to move forward on equivalence decisions for US CCPs. EC and CFTC staffs committed to resolving soon issues related to equivalence for US-based CPs under the European Markets and Infrastructure Regulation (EMIR) on the basis of an effective system of substituted compliance for dually-registered CCPs.

Participants also exchanged views on bank structural measures, securitization, money market funds, alternative investment fund managers, benchmarks, information sharing for supervisory and enforcement purposes, the implementation of UCITS reforms, and audit cooperation and macro-prudential oversight.

Capital Markets Union (CMU) 

EU participants presented the broad outlines of the EU’s new efforts to facilitate access to market-based finance through the creation of a CMU, which Treasury highlighted as a welcome step towards the development of a more resilient and integrated Single Market. 

Derivatives 

Participants reiterated the need for all G-20 jurisdictions to continue to address and implement OTC derivatives reforms in a timely manner. Participants also reaffirmed that jurisdictions and regulators should be able to defer to each other, consistent with the St. Petersburg Declaration.

Participants highlighted EU and U.S. efforts to implement OTC derivatives reforms and their continued efforts to settle remaining issues related to cross-border market participants, transactions, and infrastructures. Both sides welcomed the extension of the transitional period for capital requirements for exposures to central counterparties (CCPs). The extension allows the EU to continue to engage with CFTC and SEC staffs to move forward on equivalence decisions for U.S. CCPs. EC and CFTC staffs committed to resolving soon issues related to equivalence for U.S.-based CCPs under the European Markets and Infrastructure Regulation (EMIR) on the basis of an effective system of substituted compliance for dually-registered CCPs. 

The EU and U.S. participants discussed the importance of minimizing divergences with regard to margin for uncleared swaps, to the extent possible. 

Securitization 

Participants discussed securitization, including the Basel Committee for Banking Supervision (BCBS) and International Organization of Securities Commission (IOSCO) consultation paper on criteria for identifying simple, transparent, and comparable securitizations, and EU plans to develop “high quality securitization” (HQS) as a means to increase sources of funding for the EU economy.

Banking 

EU and U.S. participants recognized the major strides made globally through the Basel Committee and in their markets to strengthen bank capital, leverage, and liquidity, while noting critical work has to be carried out to implement outstanding elements of the robust banking regulatory framework globally. U.S. participants welcomed the launch of the Single Supervisory Mechanism (SSM), a major component of the Banking Union in the EU. Participants committed to continue cooperation on regulatory standards for internationally active banks, and exchanged views about the implications of the recent report in the framework of the BCBS’s Regulatory Consistency Assessment Programme (RCAP). Participants also discussed the Federal Reserve’s existing proposals for enhanced capital rules and the rule for supplementary leverage for the largest U.S. banks, and its forward agenda, as well as recent legislative developments on bank structural reform related to measures on both sides of the Atlantic. EU participants noted the extension of the conformance period under Volcker rule for legacy covered funds to July 2016. EU participants raised concerns about the effect of the Volcker Rule on foreign funds.

Accounting 

Participants discussed recent developments regarding the use of PCAOB and EC participants committed to continue building a stable framework for transatlantic cooperation between regulators on audits to protect investors on both EU and US markets in a manner that maximizes all regulatory resources to increase market confidence and transparency to investors. Participants looked forward to further reports on the outcomes of the informal working group established between the PCAOB, EU Member States audit regulators and the EC. The PCAOB<a href="http://http//www.pcaobus.org/" data-cke-saved-href="http://http//www.pcaobus.org/" target="_blank" );"=""> </a>and EU participants agreed on the effectiveness of a cooperative framework designed to protect investors including, inter alia, joint inspections conducted under the terms of Statements of Protocol and consistent with their respective legal and regulatory regimes and a robust dialogue and exchange of views regarding risk assessment for the greatest regulatory impact as well as the possibility of appropriate levels of reliance on the quality control work of other regulators to the extent justified.</p><p><a href="http://ec.europa.eu/finance/general-policy/docs/global/150115-us-eu-joint-statement_en.pdf" data-cke-saved-href="http://ec.europa.eu/finance/general-policy/docs/global/150115-us-eu-joint-statement_en.pdf" target="_blank">Full joint statement</a></p>

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