The European Union is looking to again postpone imposing new capital rules on EU banks that trade derivatives through non-EU clearing houses, according to a document seen Tuesday.
Amid an ongoing discussions between European and U.S. regulators, the EU has scheduled a vote Friday to delay the decision until December.
If approved it would be the third consecutive six-month grace period for European banks exempting them from an EU requirement to hold more capital when trading derivatives at unapproved foreign exchanges.
The current extension expires in June. The EU proposal seen by IFR warns of potential “disruption” in the roughly US$700trn global derivatives market if the grace period is not extended.
Under new rules formulated after the financial crisis, EU banks must hold the extra capital if they clear trades through any jurisdiction not deemed “equivalent” to EU standards.
Terry Duffy, chairman of CME Group, a US derivatives exchange, told Congress last month “Without an EU recognition of equivalence, US clearing houses will not be able to clear EU-mandated derivatives. The European Commission’s discriminatory approach to US access to EU markets is creating a significant disadvantage for U.S. markets and the participants that use those markets.”
source: www.uk.reuters.com