EU and US derivatives standards must align

Author: | Published: 8 Dec 2010

Regulators across the globe have identified over-the-counter (OTC) derivatives as one of the main causes of the financial crisis. As part of their plan to implement the commitments made in the G20 leaders’ Pittsburgh summit in September 2009, governments in the US and EU have introduced comprehensive measures to regulate trading in OTC derivatives.

The EU’s proposals are contained in the draft European Market Infrastructure Regulation (Emir). Emir is similar in many respects to the reforms already adopted in the US under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Despite a number of notable differences, broad similarities in the high-level principles (and implementation timetables) have been achieved – such as mandatory clearing for standardised contracts, reporting of cleared and OTC transactions by (nearly) all financial counterparties, the scope of derivatives covered and exemptions from clearing for end users.

However, with many of the technical standards...