Thu, Sep 18, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Aima warns that EU proposals on OTC clearing could restrict future business

Monday, May 23, 2011
New barriers to international clearing could be erected by proposed new regulations for over-the-counter (OTC) derivatives in the European Union, according to the Alternative Investment Management Association (AIMA), the global hedge fund association.

AIMA, which strongly supports mandatory central clearing of eligible OTC derivatives contracts, is calling on EU lawmakers to reconsider a key provision of the European Market Infrastructure Regulation (EMIR), the proposed future regime for mandatory clearing of OTC derivatives in the EU. This provision could in effect exclude EU-established financial services providers from using central counterparties (CCPs) which are not located in the EU, according to AIMA.

AIMA’s call to adjust the part of EMIR relating to third country CCPs comes at an important stage in the process of finalising the text of the legislation. The European Parliament’s Economic and Monetary Affairs (ECON) Committee is scheduled to vote on the issue on 24 May.

In the European Parliament’s draft text, a third country CCP would only be permitted to provide clearing services to EU entities if those entities obtained an authorisation in each individual EU Member State. Furthermore, the third country CCP would only be allowed to obtain such an authorisation if the European Commission recognised that the legal and supervisory arrangements of its home jurisdiction were “equivalent” to those contained within EMIR.

The EP has also added various other conditions which third country jurisdictions must meet in order for their CCPs to be able to obtain an EU authorisation and which are not related to the prudential regulation of CCPs.

Taken together, AIMA believes it could be difficult for many third countries and their CCPs to meet these criteria given the differences between the requirements on CCPs, clearing members and clients.

AIMA CEO Andrew Baker said: “AIMA is supportive of open international markets and opposes measures which could result in the erection of unjustifiable barriers to international trade. We believe it is important that, in particular, counterparties in the European Union and the US can still trade freely and use each other’s financial services. We believe that it is important that the international nature of the OTC derivatives market is maintained and that any unnecessary restrictions on international trading are avoided.

“What is particularly troubling about these proposals is that they go beyond OTC clearing and could potentially capture CCPs which clear shares or bonds. If that were the case, we would need hundreds of equivalence decisions or face the possibility that EU financial services providers would not be able to trade abroad. We would encourage representatives of the different European bodies to meet with non-EU regulators in order to find pragmatic solutions on recognising third country central counterparties in Europe as well as to limit clearly the scope of this to the G20 agreement on OTC derivatives.”

Globally, new rules governing OTC derivatives need to be implemented by the end of 2012 in order to meet a timetable agreed by the G20.

Source

Press release
BC

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. SEC charges 19 investment firms and one trader for breach of Rule 105[more]

    Benedicte Gravrand, Opalesque Geneva: The Securities and Exchange Commission (SEC) started a push to enhance the enforcement of Rule 105 of Regulation M last year to uncover hedge funds and private equity firms that have illegally participated in an offering of a stock after short selling it duri

  2. Fund managers, bullish on Europe, anticipate monetary policy separation of Fed and ECB[more]

    Komfie Manalo, Opalesque Asia: At least 202 fund managers with $556bn of assets under management said that while the European Central Bank (ECB) has eased its monetary policy that sent sentiments towards Europe to pick up, the Fed is expected to hike its rate in the spring of 2015. Investor

  3. Investors looking at other sources for hedge fund-like returns[more]

    Komfie Manalo, Opalesque Asia: Investors who are always on the lookout for higher gains are looking at alternative sources of income, particularly exchange-traded fund industry that generates hedge fund-like returns, according to

  4. News Briefs - Limited partners of investment managers may be subject to self-employment taxes, Just one week left until NYC's Rocktoberfest[more]

    Limited partners of investment managers may be subject to self-employment taxes On September 5, 2014, the Internal Revenue Service (“IRS”) issued Chief Counsel Advice 201436049, concluding that members of an investment manager were subject to self-employment taxes with respect to their e

  5. Opalesque Exclusive: Old Hill Partners launches specialty finance fund[more]

    Bailey McCann, Opalesque New York: Asset-backed lending is starting to heat up again after a prolonged credit squeeze. The Financial Times reports that a record £18.9bn was borrowed from asset-based lenders in the three months to the end of June. Much of this lending is driven by advanc