October 14, 2017

EC and U.S. CFTC issued a joint statement on a common approach on certain derivatives trading venues. EC also adopted European Market Infrastructure Regulation (EMIR) equivalence decision for derivatives transactions in the United States. This decision takes the form of an implementing act, which will enter into force on the twentieth day following its publication in the Official Journal of the European Union.

EC has determined the United States to be equivalent to the European Market Infrastructure Regulation (EMIR) in terms of the legal, supervisory, and enforcement arrangements for non-centrally cleared over-the-counter (OTC) derivatives transactions. The decision will alleviate the regulatory burden for EU and U.S. companies. It will allow market participants to comply with only one set of rules and to avoid duplicative or conflicting rules. The decision concludes that CFTC rules on risk monitoring and mitigation for OTC derivative contracts not cleared by a central counterparty are equivalent to EMIR. It also determines that U.S. rules on obligations on the exchange of collateral (margins) between counterparties are equivalent to the EU rules.

The aim of the common approach is to ensure that EU counterparties are able to comply with the trading obligation under Article 28 of the Markets in Financial Instruments Regulation (MiFIR) by executing mandated derivatives on EU authorized trading venues or CFTC-authorized swap execution facilities (SEFs) and designated contract markets (DCMs), while ensuring that U.S. counterparties can comply with the trade execution requirement under Section 2(h)(8) of the Commodity Exchange Act (CEA) by executing swaps on certain EU authorized trading venues that are exempted from SEF registration pursuant to CEA Section 5h(g), as well as on SEFs and DCMs. Under this approach, both EU and U.S. companies will be able to trade certain derivatives on their respective trading venues while complying with their trading obligations.

 

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Effective Date: November 03, 2017

Keywords: Europe, Americas, EU, US, Securities, PMI, EMIR, MiFIR, OTC Derivatives, Trading Venues, Trading Obligation, Decision 2017/1857, Equivalence, CFTC, EC

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