Friday, June 03, 2011

EU Commissioner Barnier Calls for Consistent Cross-Border Derivatives Regulation

As the EU reached the final stages of legislation regulating derivatives and the SEC and CFTC implement the Dodd-Frank derivatives regulatory regime, EU Commissioner for the Internal Market Michel Barnier called for consistent cross-border regulation of derivatives. In remarks at the Brookings Institute, he said that incoherence and inconsistency between EU and US derivatives regulations would have negative consequences for global financial markets and lead to regulatory arbitrage.

EU and US regulators must ensure that their regulations are the same on important issues such as scope and conditions for clearing, collateral and capital requirements, and, importantly, the recognition of each other's central counterparties and trade repositories. The Commissioner said that the implementation of Dodd-Frank Title VII should neither be postponed nor weakened. Delay is not the answer, he emphasized, adding that the EU is committed and will deliver.

Equality and reciprocity in the area of derivatives regulation are not only justified, he said, but they are also necessary. Common regulations are needed to ensure market safety, soundness and access, he noted, not divergence that will cause confusion and conflict.