US and EU Push For Common Approach with latest CFTC Framework
- CFTC relief to dually registered CCPs and DCOs in the EU by recognizing their related EMIR compliance as meeting CFTC rules.
More steps towards cross-border regulatory harmony have been taken as the United States (US) Commodity Futures Trading Commission (CFTC) today approved a substituted compliance framework for certain counterparties that are also regulated in Europe, thus simultaneously providing relief for the applicable firms from specific CFTC regulations.
This follows the joint CFTC statement with the European Commission (EC) that was announced on February 10th aimed towards a common approach for certain transatlantic dealers, and to help improve market efficiency for the many businesses and industries that use derivative markets for hedging commercial risk.
After extensive consultations with the European authorities, the determinations that were made identify comparable EMIR requirements that related to corresponding CFTC requirements, so the regulator can recognize a firm’s compliance to EMIR as acceptable to meet the definition of compliance to equivalent CFTC rules which are based on the Commodity Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Act.
Paving the way for international harmonization
While the news today only affects Derivatives Clearing Organizations (DCOs) and Central Counterparties (CCP) that are dual-registered (i.e. in both EU and the US), such collaboration could help pave the way for a standardized cross-border regulatory approach for other financial market segments in the future as further work on international harmonization is underway.
As part of the new determination, DCOs and CCPs handling Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term, settlement procedures, financial resources, and other default rules and procedures under EMIR may be considered in compliance with certain related CFTC requirements - thus providing them relief from repeated compliance from each regulator over the same type of operation, which are substituted under the new framework.
The measures follow after the recent historic Equivalence Agreement between the European Union and the United States, which allows similar requirements to be honored, with the goal of a common approach, yet the EU will still need to also recognize US firms to make it fully standardized both ways for the CCPs and DCOs. For now, the CFTC's Division of Clearing and Risk (DCR) issued a no-action letter that provides limited relief to the mentioned registrant categories, to certain aspects of their non-US clearing activities.
More steps towards cross-border regulatory harmony have been taken as the United States (US) Commodity Futures Trading Commission (CFTC) today approved a substituted compliance framework for certain counterparties that are also regulated in Europe, thus simultaneously providing relief for the applicable firms from specific CFTC regulations.
This follows the joint CFTC statement with the European Commission (EC) that was announced on February 10th aimed towards a common approach for certain transatlantic dealers, and to help improve market efficiency for the many businesses and industries that use derivative markets for hedging commercial risk.
After extensive consultations with the European authorities, the determinations that were made identify comparable EMIR requirements that related to corresponding CFTC requirements, so the regulator can recognize a firm’s compliance to EMIR as acceptable to meet the definition of compliance to equivalent CFTC rules which are based on the Commodity Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Act.
Paving the way for international harmonization
While the news today only affects Derivatives Clearing Organizations (DCOs) and Central Counterparties (CCP) that are dual-registered (i.e. in both EU and the US), such collaboration could help pave the way for a standardized cross-border regulatory approach for other financial market segments in the future as further work on international harmonization is underway.
As part of the new determination, DCOs and CCPs handling Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term, settlement procedures, financial resources, and other default rules and procedures under EMIR may be considered in compliance with certain related CFTC requirements - thus providing them relief from repeated compliance from each regulator over the same type of operation, which are substituted under the new framework.
The measures follow after the recent historic Equivalence Agreement between the European Union and the United States, which allows similar requirements to be honored, with the goal of a common approach, yet the EU will still need to also recognize US firms to make it fully standardized both ways for the CCPs and DCOs. For now, the CFTC's Division of Clearing and Risk (DCR) issued a no-action letter that provides limited relief to the mentioned registrant categories, to certain aspects of their non-US clearing activities.