EU lawmakers agreed to new legislation on how EU and third-country clearing parties operating in the European Union should be supervised.
According to the EU Council, the intended goal of the change is to enhance supervision of central counterparties ("CCPs") to take into account the increasing size, complexity and cross-border aspect of clearing within Europe. The legislation is also intended to improve the existing system for overseeing third-country clearinghouses and introducing a "two-tier" system distinguishing between non-systemically important CCPs ("Tier 2 CCPs") and systemically important CCPs.
In a joint statement, the CFTC and the European Commission ("EC") voiced an ongoing commitment to ensuring that the implementation of G20 reforms is effective in achieving the goals of "increased financial stability, resilience and transparency in the global transatlantic OTC derivatives market." Additionally, the CFTC and EC said they expect that (i) the implementation of EMIR 2.2 and (ii) the CFTC's review of its swap regulatory framework and cross-border approach will lead to "more deference between the CFTC and EU supervisions."
In a published statement on the new legislation, CFTC Chair J. Christopher Giancarlo highlighted concerns that the CFTC previously raised regarding cross-border derivatives regulation. He noted an understanding with EU authorities to address CFTC concerns in the implementation process, and that any future recognition assessments would start with the 2016 EC equivalence decision relating to U.S. CCPs and the 2016 agreement between the EC and the CFTC.
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