Fri, Mar 27, 2015
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. Other Voices: Does the hedge fund industry benefit society?[more]

    This article was authored by Don Steinbrugge, Chairman of Agecroft Partners, a US-based global consulting and third party marketing firm for hedge funds. It is no secret that the hedge fund industry is viewed negatively by a la

  2. Private credit comes into focus for investors[more]

    Bailey McCann, Opalesque New York: As investors look for a way out of the low yield/no yield environment, private credit is becoming an increasingly attractive asset class, according to a white paper from Bayshore Capital Advisors. Private credit has grown steadily since the financial crisis as

  3. M&A - Hedge funds no longer attractive targets for banks, reinsurers, Blackstone buys stake in Christopher Pucillo’s Solus event-driven hedge fund[more]

    Hedge funds no longer attractive targets for banks, reinsurers From Institutionalinvestor.com: Swiss RE, the world’s second-largest reinsurer, is looking to sell its 15 percent stake in Jersey, Channel Islands–based hedge fund firm Brevan Howard Asset Management. Morgan Stanley reported

  4. Opalesque Radio: Threadneedle expects continuing equity volatility this year[more]

    Benedicte Gravrand, Opalesque Geneva: Investors should expect more volatility, which is signaling a "slow moving" top to the market, KKM Financial’s founder and CEO Jeff Kilburg told CNBC on Monday. And this volatility is going

  5. Hedge funds show strong performance of 2.52% so far in 2015[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry got off to a strong start in 2015 "completely unmindful" of the poor performance last year, according to data provider Preqin. According to Preqin, following a year which saw the average he

 

banner