On June 11, the European Commission (the “EC”) opened for feedback a trio of draft delegated acts that, if adopted, would constitute a major step toward cohesive global regulation of international securities and derivatives markets. Specifically, the delegated acts (see here, here, and here) would allow certain central counterparties in non-EU Member States (“third-country CCPs”) to submit a request to the European Securities and Markets Authority (“ESMA”) to grant a recognition of comparable compliance. If granted, the third country’s regulatory framework would be deemed to satisfy compliance with EU regulatory requirements, which would enable the third-country CCP to serve EU market participants. The draft delegated acts also specify the criteria to be applied by ESMA when considering such requests, and the fees to be paid by third-country CCPs.
As we have written previously, cross-border swaps reform has been an important – and contentious – area of focus for securities and derivatives regulators in recent years. The adoption of comparable compliance frameworks by regulators would significantly reduce administrative and regulatory burdens on market participants and promote global regulatory cohesion. For this reason, U.S. CFTC Chairman Heath P. Tarbet praised the EC for the draft delegated acts. In his remarks, Chairman Tarbert signaled that the CFTC would explore ways to defer to EU and other regulators as appropriate, stating that deference “is a two-way street.”
Chairman Tarbert’s comments come on the heels of the recent announcement by the International Organization of Securities Commissions (“IOSCO”) that Chairman Tarbert will serve as a Vice Chair of the IOSCO Board for the 2020–2022 term. Through this new leadership role, Chairman Tarbert will have the opportunity to significantly advance international cooperation among securities and derivatives regulators.