EU, US regulators agree informally to discuss concerns about European clearinghouse bill
14 March 2018. By Neil Roland.
EU and US regulators agreed informally for the first time to discuss longstanding Washington concerns about a European bill to oversee foreign clearinghouses after Brexit.
“It’s now time for a lot of us on both sides of the pond to actually get together, to start talking,” Patrick Pearson, the European Commission’s financial market infrastructure chief, said at an industry conference Wednesday.* “We understand your concerns. Maybe you need to talk to us to understand a little bit of our concerns and why our words say what they say.”
Eric Pan, a US Commodity Futures Trading Commission official appearing on a panel with Pearson, reacted with pleasant surprise.
“I love the spirit coming from Patrick,” said Pan, who heads the CFTC’s international affairs unit. “It’s one that I believe has been missing for the last few months to a year.”
“I very much hope we can have that conversation,” he said. “I’d very much welcome that type of concrete discussion.”
After the panel discussion ended, Pearson told MLex that he expects that he and his colleagues will hear from CFTC Chairman J. Christopher Giancarlo, who was in the audience but left after the discussion moved on.
The European official strongly praised Giancarlo’s speech Wednesday calling for mutual recognition of the two sides’ rules.
A Giancarlo spokeswoman said the chairman declined to comment on Pearson’s remarks.
The legislation proposed by the European Commission, now before the European Parliament, would extend EU supervision over international clearinghouses, with a special eye on euro clearing in the UK.
Giancarlo appeared before the Parliament in late February expressing concern that the bill would abridge a 2016 EU-US agreement to mutually recognize each other’s clearinghouses. CFTC officials have said the legislation could impose added costs on US derivative traders by creating duplicate requirements.
Pan expanded on those concerns in the panel discussion Wednesday.
“What we don’t want to have,” he said, “is overlapping regulations, duplicative rules, duplicative supervision, lack of communication between authorities. That we all can agree is undesirable.”
Pearson expressed perplexity about US concerns and the way Giancarlo has been conveying them through public statements.
“Maybe there’s a lot that’s getting lost in translation,” he said “We don’t want confrontation, we don’t want polarization. We want collaboration. That’s what makes regulations work. We don’t want to regulate the world by rhetoric.”
Pearson said in testimony before the European Parliament in late February that he was asked whether the EU plans to try to change its 2016 clearinghouse equivalence agreement with the US.
He said Wednesday that he told European lawmakers: “The European Commission has no intention to change, amend, redraft or withdraw this equivalence agreement within coming years. We’re quite bedazzled and perhaps flummoxed why this question is on the board.”
*Boca 2018 International Futures Industry Conference. Futures Industry Association. Boca Raton, Florida. March 14, 2018.