In another chapter in this long running saga, a global exchange body has urged the EU to speed up the process of determining and/or granting CCP equivalence, or potentially face regulatory arbitrage by derivatives markets.
The World Federation of Exchanges (WFE) said delays by Brussels in deciding whether to allow non-EU clearing houses to continue serving European users risk a capital flight from some emerging market economies. The EU's executive European Commission must deem a third-party country's clearing house rules to be "equivalent" or as strict as those in the 28-country bloc. Without this determination, a non-EU clearing house for derivatives such as credit default swaps would have to hold more capital to do business with investors in the EU, hence bumping up fees for users. Brussels is already locked in prolonged negotiations with Washington over whether U.S. clearing rules are equivalent to its own, while determinations for 31 clearing houses from 14 other countries remain in line.