US and
European regulators are set to come to an agreement on harmonising rules on
derivatives clearing houses by the end of this summer, after a long and drawn
out ordeal.
Timothy Massad, chairman of the US Commodity Futures Trading Commission, was inBrussels this week to discuss an agreement on recognition of each region’s
rules on clearing houses, but failed to do so.
After ending talks on Thursday, a joint statement from Massad and Jonathan
Hill, European Commissioner for Financial Stability, Financial Services and
Capital Markets Union, said: “Discussions are constructive and progressing.
They have been mutually satisfactory on the issue of the ability for both sides
to potentially defer to each other's rules. Commissioner Hill and Chairman
Massad agreed to continue their discussions with the aim of finalising an
approach by the summer.”
Impatience has been growing throughout the derivatives industry as the disagreement
goes on.
Without recognition, costs for European participants to clear trades through
central counterparties (CCPs) in the US, mainly CME, would rise
substantially.
Part of the disagreement lies in the CFTC using a one day minimum liquidation
period, while Europe requires a minimum two day period, as highlighted bytheTRADEnews.com last week.
If Europe doesn’t recognise US CCPs by June this year, it will have to delay
new capital requirement rules again, as it did in December 2014.