A&O Shearman | FinReg | EU Equivalence Decision on US Derivatives Trading Venues Published
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  • EU Equivalence Decision on US Derivatives Trading Venues Published


    The European Commission has adopted a Commission Implementing Decision on the equivalence of the legal and supervisory framework applicable to designated contract markets and swap execution facilities in the United States for the purposes of the trading obligation for derivatives under the Markets in Financial Instruments Regulation. From January 3, 2018 MiFIR will require that derivatives declared subject to the trading obligation must be traded on EU trading venues or third-country trading venues recognized by the European Commission as equivalent. Derivatives that will be subject to the trading obligation are euro, dollar and pound interest rate swaps in the most common benchmark tenors, as well as index-based credit default swaps.

    The Implementing Decision ensures that EU counterparties can trade the derivatives instruments that are subject to the trading obligation on Commodity Futures Trading Commission-authorized DCMs and SEFs in the US. The Implementing Decision does not affect the ability of EU counterparties to continue to trade on any CFTC-authorized SEF or DCM with respect to those derivatives which are not subject to the MiFIR trading obligation.

    The adoption of the Implementing Decision follows the agreement reached in October 2017 between the European Commission and the CFTC on a common approach for recognizing certain derivatives trading venues authorized in the EU and the US for the purposes of the trading obligation under MiFIR. Under the common approach, the CFTC will exempt EU Multilateral Trading Facilities and Organised Trading Facilities from the requirement to register as SEFs, which will allow counterparties to satisfy the CFTC’s trade execution requirement on MTFs and OTFs that are granted exempt SEF status by the CFTC.

    The Implementing Decision was published in the Official Journal of the European Union on December 6, 2017 and enters into force on December 7, 2017.

    View the Commission Implementing Decision ((EU) 2017/2238).

    View the EU-CFTC joint statement.

    Topics: DerivativesMiFID II