The world’s derivatives markets noticed greater than $640 trillion in buying and selling exercise within the first six months of 2019 alone. On the coronary heart of those international markets are clearinghouses referred to as central counterparties, the place futures, swaps and choices transactions are cleared and settled. The environment friendly and correct functioning of central counterparties is important to the well being of the worldwide monetary system and the financial well-being of the greater than 770 million folks within the EU and U.S.
Derivatives enable firms to hedge their threat, they usually inform all the pieces from pension returns and mortgage rates of interest to the price of milk and bread. As leaders of the commissions that regulate derivatives markets within the EU and U.S., we’re each dedicated to establishing a harmonious relationship that achieves shared regulatory aims whereas affording applicable deference to home-country authorities.
This dedication to worldwide regulatory comity stays of significant significance within the monetary world after the worldwide monetary disaster—and much more so within the post-Covid future. The ever-changing monetary, financial and even political relationships in our world continuously reinvigorate intense debate about the place regulatory jurisdictions start and finish: Will the EU regulate derivatives clearinghouses which can be dually registered within the U.S.? Will the U.S. proceed to do the identical to EU clearinghouses which can be supervised underneath related guidelines at dwelling? We knew that taking place this street aimlessly would proceed to yield solely a complicated and contradictory patchwork of laws that may pressure the worldwide derivatives markets, to the detriment of our respective economies and customers.
After refreshing the dialogue between our two sides greater than a 12 months in the past, the EU and U.S. have now decided and are implementing a mutually useful set of steps that promise clear, predictable and sound regulation and supervision for derivatives central counterparties. We every have our respective mandates—EU authorities and the CFTC each have main regulatory and supervisory authority over derivatives central counterparties domiciled in our jurisdictions and working on our markets.