US-EU regulators unable to reach consensus over cross-border derivatives rules

The CFTC has extended its exemption from the uncleared margin rules for US firms doing business in Europe.

US and European regulators have been unable to agree over international rules for uncleared derivatives, with the former granting a no-action letter to allow US firms to continue doing business in Europe.

The US Commodity Futures Trading Commission (CFTC) and the European Commission (EC) have been working together to find a consensus over collateral rules for banks doing business in both the US and EU.

US firms that have European operations are currently exempt from complying with margin requirements for non-cleared derivatives until 8 May.

However, the CFTC stated that an equivalence determination from the EC has not yet been completed, and believes an agreement won’t be reached by 8 May.

It has therefore extended its exemption in a no-action relief letter to 7 November, in order to give swap dealers “certainty about their regulatory obligations while the CFTC undertakes its substituted compliance determination and the EC its equivalence decision,” the US derivatives watchdog stated.

Europe went ahead with its uncleared margin rules on 1 March, despite industry-wide pressure to delay implementation.