The European Commission has once again postponed a crucial deadline that would have seen European suffer banks suffer higher capital requirements to do business in the US, as international regulators fail to agree on equivalent clearing house rules.
The EU first extended the capital requirements deadline in December last year, and was set to expire on June 15, 2015. This has now been postponed again until December 15, 2015.
“The decision will give the market the legal certainty it needs for the next six months,” says Jonathan Hill, EU Commissioner for Financial Stability, Financial Services and Capital Markets Union. “Meanwhile we are continuing to work hard on solving the underlying issues.”
Impatience has grown throughout the derivatives industry, in which the transatlantic dispute over clearing poses the risk of significantly disputing markets.
Without recognition, costs for European participants to clear trades through central counterparties (CCPs) in the US, such as CME and ICE, would rise substantially.
According to a joint statement issued by the EU and US Commodity Futures Trading Commission (CFTC) in May, the regulators are targeting an agreement on harmonising rules on derivatives clearing by the end of the summer.