SEC and ASIC reveal Emir equivalency concerns

Author: Ashley Lee | Published: 4 Jun 2013


· On May 1, the US SEC released its proposals for substituted compliance for non-US CCPs in the OTC derivatives market;

· Substituted compliance is outcomes-based, and has been described as a 'middle ground’ compared to other proposals in the market;

· Outcomes-based substituted compliance contrasts with Emir’s equivalency regime, which takes a rule-by-rule approach;

· Currently, a non-equivalency determination of a jurisdiction’s OTC derivatives regulations would mean that all CCPs from that jurisdiction would not be able to do business in the EU.

Although Title VII of the US’ Dodd-Frank Act has attracted much frustration related to extraterritorial regulations of OTC derivatives, regulators and market participants are beginning to turn their attention to European regulations.

The European Securities and Markets Authority’s (Esma’s) over-the-counter (OTC) derivatives reforms fall under the European Market Infrastructure Regulation (Emir). Emir came into force in August 2012 but requires further implementing legislation in Europe before...