Swaps Regulation - White Paper - International Swaps and Derivatives Association & Clifford Chance: Regulation of OTC derivatives markets A comparison of EU and US initiatives

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September 2010

From the white paper:

"On 15 September 2010 the European Commission published its formal legislative proposal for a Regulation on OTC derivatives, central counterparties and trade repositories. Like the US Dodd-Frank Wall Street Reform and Consumer Protection Act, the proposed EU Regulation aims to fulfil the G20 commitments that all standardised over-the-counter (OTC) derivatives should be cleared through central counterparties (CCPs) by end-2012 at the latest and that OTC derivatives contracts should be reported to trade repositories.

"There is a significant commonality in the approaches adopted by the proposed EU Regulation and the Dodd-Frank Act in relation to the regulation of OTC derivatives markets, but there are also some significant differences. This paper summarises the way in which the two regimes treat different categories of counterparty and highlights certain other major differences between the proposed EU Regulation and the Dodd-Frank Act in relation to the trading and clearing of OTC derivatives.

"The proposed EU Regulation is subject to amendment during the legislative process and both the proposed EU Regulation and the Dodd-Frank Act envisage that there will be extensive regulatory technical standards and implementing rules that will have a significant effect on how the two regimes operate in practice. In addition, the Dodd-Frank Act addresses issues relating to the trading and transparency of transactions in OTC derivatives that are not addressed by the proposed EU Regulation as they are being considered separately as part of the review of the EU Markets in Financial Instruments Directive (MiFID) currently under way in the EU."

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