EU and US reach agreement on derivatives

The European Union and the US have reached an agreement over derivatives that will see them adopt a “common approach” to clearing houses’ requirements, ending a long-standing dispute.

The European Commission said the agreement will ensure European central clearing counterparties (CCPs) are able to do business in the US more easily and that US CCPs can continue to provide services to EU companies.

The EC said a common approach to the regulation and supervision of global derivatives market was critical to supporting cross-border trade and investment and maintaining financial stability.

Jonathan Hill, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said: “This is an important step forward for global regulatory convergence.

"It has taken a long time, but it is good news that after more than three years of discussion, we are now able to provide certainty for the marketplace.”

The European Commission said the steps needed to implement the agreement will be put into place as soon as practicable

If the EU had not recognised US rules, banks in Europe would need to hold more capital.

CCPs are financial market infrastructures which enhance market and financial stability by guaranteeing the obligations of each counterparty to a transaction. Cleared transactions commonly include derivatives and other financial products such as bonds, equities and securities financing contracts.