OTC Derivatives Regulation - Paper - Report on Cross-Border Implementation Issues
On August 30, 2013, per the request of the G20, a consortium of authorities responsible for OTC derivatives regulation in Australia, Brazil, the European Union, Hong Kong, Japan, Ontario, Quebec, Singapore, Switzerland and the United States issued a report regarding common understandings to improve the cross-border implementation of OTC derivatives reforms. The report reflects a number of substantive understandings to improve the cross-border implementation of OTC derivatives reforms.
Among the understandings:
- Early and comprehensive consultation among relevant authorities when equivalence or substituted compliance assessments are being undertaken is essential.
- A flexible, outcomes-based approach should form the basis of final assessments regarding equivalence or substituted compliance assessments.
- A “stricter-rule” approach would apply to address gaps in mandatory trading or clearing obligations.
- Authorities have a framework for consultation on mandatory clearing determinations.
- Jurisdictions should remove barriers (1) to reporting to trade repositories by market participants and (2) to access to trade repository data by authorities.
- There should be appropriate transitional measures and a reasonable but limited transition period for foreign entities to implement OTC derivatives reforms.<ref>OTC Derivatives Regulators Issue Report to the G20. CFTC. Retrieved on August 30, 2013.</ref>
The 2014 update concentrates on two areas:
- potential gaps and duplications in the treatment of branches and affiliates; and
- treatment of organized trading platforms and implementation of the G20 trading commitment.
The report also addressed four areas in which it was working to implement understandings reached previously:
- equivalence and substituted compliance;
- clearing determinations;
- risk mitigation techniques for non-centrally cleared derivatives transactions (margin); and
- data in trade repositories and barriers to reporting to trade repositories.
The 2015 update highlights the progress made since November 2014, including:
- Four memoranda of understanding (MOUs) signed by ESMA on the CCPs for Australia, Hong Kong, Japan and Singapore;
- SEC Regulation SBSR, February 2015;
- SEC Final Rule: Registration of Security-Based Swap Dealers and Major Security-Based Swap Participants, August 2015;
- CFTC DCO exemptions for ASX Clear (Futures) Australia, August 2015, Japan Securities Clearing Corp. (October 2015), and
- An MOU between ESMA and the SFC (Hong Kong).
Related Documents: 2013, 2014, 2015 Reports