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Tough response required to EU regulators, says US derivatives exchange head 

April 7, 2015


Terry Duffy the chairman of US derivatives marketplace CME Group told the US House of Representatives that the Commodity Futures Trading Commission (CFTC), the main US derivatives regulator, must find a way to end a year-long argument over clearing houses with its counterpart, the European Commission.

The cost to  EU banking groups of trading through US clearing houses may rise sharply on 15 June because of EU rules on banks' capital requirements. Under rules introduced after the banking crisis EU banks must ensure they have capital to cover part of their exposure to derivatives trades transacted through clearing houses. That requirement is higher for trades routed through US clearing houses than through those in the EU or in countries whose rules, as regards clearing houses,  are treated by the EU as 'equivalent' to EU rules.

"Without an EU equivalence determination by June 15, US clearing houses, like CME, will no longer be treated as [central counterparties] from a capital perspective, significantly increasing the costs for European clearing firms to use US clearing houses," said Duffy.

Read more: Out-Law

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