Sixteen EU-backed derivatives trading venues given access to US traders by CFTC

23 July 2020 17:00 by Neil Roland

EU flag line

Sixteen European Union-authorized trading platforms in five countries were granted access to US derivatives traders today without being subject to Washington oversight in the wake of the European Commission’s new third-country clearinghouse thresholds.

“Today’s action is based on continued signs that the European Commission and the European Securities Markets Authority are working in good faith to build an appropriate degree of deference into their implementation" of EMIR 2.2, said Heath Tarbert, head of the US Commodity Futures Trading Commission.

The CFTC’s unanimous order followed its more contentious 3-2 vote along party lines today to defer to overseas authorities for oversight of foreign affiliates of US banks that negotiate trades with other offshore entities in America while booking the transactions overseas.

The 16 new EU-sanctioned trading venues that will be exempt from registering with the CFTC as swap execution facilities are located in France, Germany, the Netherlands, Spain and the UK.

Seventeen UK-based multilateral trading facilities and organized trading facilities had previously been approved for this exemption, bringing the number of exempt European trading venues to 33.

“When exercised properly, deference eliminates duplicative regulatory burdens for market participants and conserves the commission’s resources,” Republican Commissioner Brian Quintenz said.

Quintenz said he opposed granting this deference in 2018 because the EMIR 2.2 law had “raised the possibility of EU authorities directly supervising US clearinghouses.”

— EU acts last week —

On July 14, the EU adopted three delegated acts that set numerical thresholds at which third-country clearinghouses would be subject to European regulation.

“The standards set forth in the delegated acts are predictable, proportionate and designed to provide an appropriate degree of deference to home-country supervision,” Tarbert said.

Today’s order also makes clear that the CFTC’s previous registration exemptions for UK venues will continue to apply during the remainder of the Brexit transition period.

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