EC adopted an equivalence decision determining that the SEC regime for U.S. central counterparties is equivalent to the EU rules. The equivalence decision determines that the legal and supervisory arrangements applicable to U.S. central counterparties registered with SEC can be considered to be equivalent to requirements laid down in the European Market Infrastructure Regulation (EMIR). The decision will allow such U.S. central counterparties to apply for recognition by ESMA. Once ESMA recognizes them, these U.S. central counterparties will be able to provide central clearing services in EU. The decision shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
The responsibility for supervision of central counterparties in the U.S. is shared between SEC and CFTC. This decision complements the existing equivalence decision for U.S. central counterparties regarding CFTC, which was adopted in 2016. The equivalence decision applies only to SEC-regulated covered clearing agencies and is conditional. To be allowed to offer services in EU, the U.S. central counterparties will have to have rules in place with respect to certain risk management requirements. ESMA already recognized a number of U.S. central counterparties registered with, and supervised by, CFTC. EC plans to review the rationale for equivalence every three years. For EC to adopt an equivalence decision, a third-country regime has to fulfil three conditions laid down in EMIR:
- Central counterparties authorized in the third country must comply with legally binding requirements that are equivalent to requirements laid down in EMIR
- Central counterparties in the third country must be subject to effective supervision on an ongoing basis.
- The legal framework of the third country must provide for an effective equivalent system for the recognition of foreign central counterparties.
Effective Date: OJ+20 Days
Keywords: Europe, Americas, EU, US, Banking, Central Counterparty, CCPs, Derivatives, Central Clearing, Equivalence Regime, CFTC, SEC, EC
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